Crude oil prices fells Wednesday despite Energy Information Administration data showing a big draw in U.S. crude inventories, Kallanish Energy reports.
Brent crude futures fell 88 cents to $62.95 a barrel, while U.S. West Texas Intermediate crude was down $1.10, to $55.67/Bbl.
Sentiment in the oil market is turning negative, as investors worry about slowing global economic growth weakening oil demand.
Yet the market was supported by a large drawdown in U.S. crude stockpiles earlier in the session. Crude inventories fell 10.84 million barrels (Mmbbl) in the week ended July 19, EIA reported Wednesday. (See full story elsewhere in this issue.) Analysts expected a drop of 4 Mmbbl.
Oil companies cut some production in the Gulf of Mexico ahead of Hurricane/Tropical Storm Barry, which came ashore in Louisiana earlier this month.
Meanwhile, some geopolitical risk premium from tensions in the Middle East also helped buoy prices.
A U.S. Navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone go into the water, the U.S. military said Tuesday.
Iran’s president, Hassan Rouhani, said Wednesday his country was ready for “just” negotiations but not if they meant surrender, without saying what talks he had in mind.
Also fueling tensions, Britain gained initial support from France, Italy and Denmark for its plan for a European-led naval mission to ensure safe shipping through the Strait of Hormuz following Iran’s capture of a British-flagged tanker.
The military adviser to Iran’s supreme leader was quoted on Wednesday as saying that any change in the status of the Strait of Hormuz, which Tehran says it protects, would open the door to a dangerous confrontation.
This post appeared first on Kallanish Energy News.