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Picture: 123RF
Picture: 123RF

Kuala Lumpur — Oil prices held steady on Wednesday as the concern about weaker demand offset industry data that showed a larger-than-expected drawdown in US crude stockpiles.

Brent crude futures were at $104.35 a barrel at 2.50am GMT, down 5c, or 0.05%. U.S. West Texas Intermediate (WTI) crude rose 9c, or 0.1%, to $95.07 a barrel. WTI had climbed nearly $1 earlier in the session.

“A sharper decline in inventories should support oil prices, but the rebound was limited by concerns about potential weak demand, and the White House stated that it will further release strategic reserves,” said Leon Li, a Shanghai-based analyst at CMC Markets.

In addition, the prospect the US Federal Reserve will announce an aggressive rate rise later on Wednesday weighed on sentiment and limited the rise in oil prices, he said.

After Tuesday’s settlement, industry group the American Petroleum Institute said crude stocks in the US fell by 4-million barrels last week.

That was four times bigger than the decline expected by analysts in a Reuters poll.

Petrol inventories fell by 1.1-million barrels, compared with expectations for a build of 3.5-million barrels, the data showed.

The US government’s Energy Information Administration releases its weekly oil report later on Wednesday.

The Biden administration said on Tuesday it will sell an additional 20-million barrels of oil from the country’s Strategic Petroleum Reserve as part of a previously announced plan to tap the facility to calm oil prices boosted by Russia’s invasion of Ukraine and a recovery in demand following the Covid-19 pandemic.

The administration said in late March it would release a record 1-million barrels of oil a day for six months from the SPR. The US has already sold 125-million barrels from the reserve with nearly 70-million barrels delivered to purchasers.

Meanwhile, the US Federal Reserve is expected to raise interest rates by 75 basis points later on Wednesday, underlining concern about the outlook for US demand and the prospect of a stronger dollar, which would make dollar-denominated commodities more expensive for buyers holding other currencies.

Reuters

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