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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday shortly after the New York opening and ahead of the release of the U.S. government’s weekly inventories report at 14:30 GMT.

Prices are up for a third session as the easing of lockdowns and restrictions in the United States and parts of Europe led to optimistic forecasts calling for a boost in fuel demand during the summer and offset concerns about the rise of COVID-19 infections in India and Japan.

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At 13:00 GMT, June WTI crude oil futures are trading $66.59, up $0.90 or +1.37% and July Brent crude oil is at $69.83, up $0.95 or +1.38%. Both futures contracts exceeded their March 8 tops.

Domestic and international crude oil prices were also supported by a large fall in U.S. inventories. Traders are now awaiting data from the U.S. Energy Information Administration (EIA) due at 14:30 GMT on Wednesday to see if official data shows such a large fall.

Vaccine Rollouts, Economic Data Underpinning Prices

The rise in oil prices to multi-month highs earlier today has been supported by COVID-19 vaccine rollouts in Europe and the United States where more than 40% of U.S. adults have received a vaccine.

Euro Zone business accelerated last month as the bloc’s dominant services industry shrugged off renewed lockdowns and returned to growth.

In the United States, private job growth accelerated in April but fell a bit short of Wall Street expectations, according to a report Wednesday from payroll processing firm ADP.

Companies added 742,000 workers for the month, a jump from March’s upwardly revised 565,000 but a bit shy of the 800,000 forecast from economists surveyed by Dow Jones.

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American Petroleum Institute Weekly Inventories Report

The American Petroleum Institute (API) reported late Tuesday that U.S. crude supplies fell by 7.7 million barrels for the week ended April 30. Ahead of the report, traders were pricing in at 3.9 million barrel draw.

The API also reported that gasoline stockpiles fell by 5.3 million barrels versus pre-report estimates of a 500,000 barrel drawdown.

Meanwhile, distillate inventories declined by nearly 3.5 million barrels. Traders were looking for a 1.6 million barrel drawdown.

Daily Forecast

Today’s EIA report is likely to set the tone for the rest of the session. Traders are looking for a crude oil drawdown of 1.9 million barrels.

Prices could spike higher if the number is higher than expected, especially if it exceeds the API’s 7.7 million barrel draw. Traders will also be watching the gasoline numbers closely. A stronger-than-expected draw in gasoline stockpiles will be further confirmation that the economy is heating up.

“The partial lifting of mobility restrictions, the expectation that tourism will return in the near future, and the lure of the psychologically important $70 mark are all likely to have contributed to the price rise,” Commerzbank analyst Eugen Weinberg said.

For a look at all of today’s economic events, check out our economic calendar.

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