Oil Rebounds After Industry Report Shows Shrinking U.S. Supplies

© Bloomberg. Oil pump jacks operate at the Inglewood Oil Field in Culver City, California, U.S., on Sunday, July 11, 2021. Oil dipped after a two-day gain as investors assessed the demand outlook amid a resurgence of Covid-19 in many regions. Photographer: Kyle Grillot/Bloomberg

(Bloomberg) -- Oil rebounded in post-market trading after an industry report showed declining U.S. inventories.

Futures in New York edged up after closing 0.4% lower on Tuesday. Domestic crude supplies fell 4.73 million barrels last week, according to people familiar with data from the industry-funded American Petroleum Institute. Gasoline stockpiles declined 6.23 million barrels, the API said. The fuel supply drop would be the largest since March if U.S. government data confirms it Wednesday.

U.S. benchmark crude futures are poised for the second monthly drop since October with the delta variant interrupting a rebound in demand. Though global inventories are expected to tighten through the end of the year, new movement restrictions have dampened fuel consumption in some countries.

A rise in cases of the highly contagious delta variant has prompted new restrictions across the world. The positive test rate in Indonesia is the worst in Asia, while Thailand and Vietnam have introduced curfews to curb the spread of the virus. In the U.S., health officials said fully vaccinated people should go back to wearing masks indoors in places where infections are soaring.

“It’s more of a hit to sentiment at this point,” said John Kilduff, a partner at Again Capital LLC. “The petroleum complex is much more sensitive to the Covid-19 developments, particularly when they are going negative.”

While the International Monetary Fund sees global economic growth rebounding by the most in four decades this year, unequal access to vaccines will widen the economic recovery gap between advanced and developing economies, the fund said in an updated World Economic Outlook released Tuesday.

“There are serious concerns about whether or not the global economies will hit a hiccup as a result of additional Covid variants,” said Gary Cunningham, director of market research at Tradition Energy.

The API also reported inventories declined by 126,000 barrels at the nation’s biggest storage hub at Cushing, Oklahoma, while distillate inventories fell 1.88 million barrels last week.

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