An oil well is seen near Denver, Colorado. Picture: REUTERS
An oil well is seen near Denver, Colorado. Picture: REUTERS

London — Oil rose to $46 a barrel on Wednesday, gaining for a third day, supported by a report that US crude inventories fell and as surveys showing stronger manufacturing raised hopes of a recovery from the coronavirus pandemic.

US crude stocks fell by 6.4-million barrels, the American Petroleum Institute (API) said, more than forecast.

Manufacturing surveys around the world showed expanding activity in August, although the outlook remains shaky.

Brent crude, the global benchmark, was up 37 US cents, or 0.8%, to $45.95 a barrel as of 9.11am GMT, climbing for a third day. US West Texas Intermediate rose 34 cents, or 0.8%, to $43.10.

“Market players are currently riding a wave of optimism, though it could come crashing down at any moment,” said Stephen Brennock of oil broker PVM.

US crude inventories were forecast to fall by 1.9-million barrels.

The US government's Energy Information Administration issues its official figures at 2.30pm GMT, which will be scrutinised to see if they confirm the API's numbers.

The EIA figures “may provide some short-term volatility but are unlikely to provide enough impetus to break oil out of its recent trading ranges”, Oanda analyst Jeffrey Halley said.

Oil has recovered from historic lows hit in April, when Brent slumped to a 21-year low below $16 and US crude went negative.

A record supply cut by Opec and allies, a grouping known as Opec+, has helped support prices.

The producers have begun to return some crude to the market as demand partially recovers and Opec raised output in August by about one-million barrels per day, a Reuters survey found on Tuesday.

Reuters

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