Oil Up After U.S. Crude Supply Data Signals Tight Market

© Reuters.

By Gina Lee

AiVIF.com – Oil was up on Wednesday morning in Asia, with investors continuing to digest a drawdown in U.S. crude supply that raised supply concerns.

Brent oil futures rose 1.01% to $106.03 by 11:18 PM ET (3:18 AM GMT) and WTI futures jumped 1.14% to $103.58.

The gains came after the European Union said on Tuesday that it is mapping out fresh sanctions against Russia. The sanctions, which come in response to Moscow’s invasion of Ukraine on Feb. 24, will target Russian crude supply. Russia is the second-largest crude oil exporter globally.

European Commission President Ursula von der Leyen is expected to lay out the bloc’s plans later in the day, according to officials.

Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a draw of 3.479 million barrels for the week ended Apr. 28. Forecasts prepared by AiVIF.com predicted a draw of 1.167 million barrels, while a 4.780-million-barrel build was reported during the previous week.

"The API report had people stop worrying about the demand side and start worrying about the supply side again," Price Futures Group analyst Phil Flynn told Reuters.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.

In Asia Pacific, fuel demand concerns arising from the ongoing COVID-19 lockdowns in China saw the black liquid fall by more than 2% during the previous session.

The capital city of Beijing is mass-testing residents, a move aimed at avoiding a lockdown like that imposed on Shanghai over the past month. Other moves include closing restaurants in the city and sealing off some apartment blocks.

Meanwhile, the Organization of the Petroleum Exporting Countries and allies (OPEC+) will also meet virtually on Thursday.