Oil Stabilizes After 5% Fall as U.S. Gas Demand Seems Resilient By Investing.com

© Reuters.

By Ambar Warrick

Investing.com– Oil prices rose on Wednesday after falling 5% in the previous session as signs of strong U.S. gasoline demand helped ease worries about a supply glut caused by Iran and an increase in crude inventories.

Crude prices fell on Tuesday after reports indicated that Washington and Tehran had reached an agreement to revive the nuclear deal. The move is expected to lift sanctions on Iran and see the release of more than a million barrels a day of supply to the market.

Data from the , which showed U.S. crude inventories unexpectedly rose by 593,000 barrels last week, also put pressure on prices.

Official data from , due later today, is expected to show a drop in inventories of 1.5 million barrels.

Trading in London was flat around $98.44 a barrel as of 8:23 p.m. ET (0023 GMT), while US West Texas Intermediate futures rose 0.5% to $92.17 a barrel .

API data, which typically heralds a similar reading from the EIA, also showed gasoline inventories fell 3.4 million barrels last week.

The reading indicates that consumer demand for gas has persevered despite rising inflation and interest rates in the country.

Wholesale trade also fell to its lowest level since before the Russian-Ukrainian conflict, indicating greater relief for American consumers. It also comes amid a continued drawdown of the US Strategic Petroleum Reserve (SPR) by the White House in an effort to stabilize local gas prices.

The SPR, which is an emergency stock maintained by the US Department of Energy, is currently at its lowest in nearly 38 years.

But slowing economic growth and rising inflation across much of the world have raised concerns about weak demand for rough outside the United States, particularly among major Asian importers.

China, the largest importer of rough, has seen a drastic slowdown in economic growth this year, which has weighed on rough imports into the country. Crude prices are set for their third consecutive month of declines, their worst losing streak in more than two years.

Brent oil prices fell more than 10% in August, while WTI lost almost 7%.

Still, the Organization of the Petroleum Exporting Countries and its allies have pledged to cut production to keep prices buoyant this year. A cartel meeting next week should provide more clarity on the planned cuts.