Oil futures gained a little ground Wednesday as Russia moved to curb natural-gas flows to Europe and industry data showed a big drop in U.S. crude and product inventories.
Traders were also awaiting the outcome of a Federal Reserve meeting that’s expected to see another large interest-rate hike.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
+2.20% CLU22,
+2.20%
rose 96 cents, or 1%, to $95.94 a barrel on the New York Mercantile Exchange. -
September Brent crude
BRNU22,
+2.05% ,
the global benchmark, rose 89 cents, or 0.9%, to $105.29 a barrel on ICE Futures Europe. The most actively traded October contract
BRN00,
+2.21% BRNV22,
+2.21%
was p $1.05, or 1.1%, at $100.51 a barrel. -
Back on Nymex, August gasoline
RBQ22,
+1.49%
rose 1.7% to $3.133 a gallon, while August heating oil
HOQ22,
+2.90%
gained 1.3% to $3.629 a gallon. -
August natural gas
NGQ22,
-3.04%
ticked up 0.1%, to $8.998 per million British thermal units.
Market drivers
Oil was lifted and natural gas ended at a seven-week high on Tuesday after Russian energy giant Gazprom said it would cut natural-gas flows to Germany through the Nord Stream 1 pipeline to 20% of capacity. The move was seen having a spillover effect on expectations that a natural-gas crunch could spark increased demand for crude oil and fuels such as diesel.
Investors will also be watching U.S. inventory data on Wednesday. The American Petroleum Institute late Tuesday said U.S. crude supplies fell 4 million barrels last week, according to the Dow Jones Newswires, while gasoline inventories dropped 1.1 million barrels and distillate stocks declined 600,000 barrels.
Official data from the Energy Information Administration is due Wednesday morning. On average, analysts expect an 800,000-barrel fall in domestic crude inventories for the week ended July 22, along with supply declines of 1.1 million barrels for gasoline and 200,000 barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.
The Fed is expected to announce another 75 basis point rise in its benchmark interest rate on Wednesday. Concerns that aggressive monetary tightening by the Fed and other central banks could tip the economy into recession or spark a sharp slowdown have weighed on crude oil prices in recent weeks, analysts said.
Read: Four things you will want to listen for at Wednesday’s Federal Reserve meeting
From a technical perspective, WTI “quietly broke down through key support at $95.18 on a (electronic) closing basis Friday and that has caused some trend-following and systematic traders to liquidate long positions,” wrote analysts at Sevens Report Research, in a note.
“Our technical view of oil has now shifted from cautiously bullish to neutral with rising risks to the downside, especially after WTI closed below that aforementioned support at the March and April double bottom lows ($95.18) for a second time in a week yesterday,” they wrote.
