Oil prices rebounded on Wednesday after U.S. government data showed domestic crude oil supplies dropped by more than expected. Prices also appear resilient to conflict in the Middle East as optimism grows for a ceasefire agreement between Israel and Hamas.
Weekly crude oil inventories fell by 1.4 million barrels last week, driven by an increase in fuel processing rates as oil refineries emerge from seasonal maintenance, according to U.S. government data released Wednesday.
West Texas Intermediate futures, the U.S. benchmark, rose 31 cents, or 0.4% to $78.69 a barrel after falling earlier in the session, while Brent crude futures, the international benchmark, rose 20 cents, or 0.2%, to $83.36 a barrel.
However, oil prices are down nearly 9% month-on-month, as the risk dissipates that conflict in the Middle East could disrupt supplies from oil-producing nations such as Iran and Saudi Arabia.
Hopes are also rising for a ceasefire between Israel and Hamas. CIA Director William Burns traveled to Cairo, Egypt to negotiate with Israeli president Benjamin Netanyahu on Wednesday, while President Joe Biden delayed the sale of new weapons to Israel after Israel seized the Gaza side of a crossing to Egypt.
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The Biden administration expressed confidence on Wednesday that a ceasefire deal between Hamas and Israel is within reach.
Oil prices have also been pressured by a strong dollar, which makes oil more expensive for foreign currency holders. The dollar index, which measures the greenback against six major currencies, traded up to 105.51 on Wednesday afternoon, and is up about 4% on the year.
Write to Brian Swint at brian.swint@barrons.com
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