Oil prices rise $1 after drop in U.S. stockpiles

Oil prices rose over $1 on Wednesday, rebounding from six-month lows hit the previous day, as an unexpectedly large drop in U.S. oil and gasoline stocks reminded investors that demand remains firm if overshadowed by the prospect of a global recession, Reuters reported.
Brent crude futures were last up 82 cents, or 0.9%, to $93.16 a barrel by 0630 GMT.
West Texas Intermediate (WTI) crude futures also rose 85 cents, or 1%, to $87.38 a barrel.
The contracts slumped about 3% on Tuesday as weak U.S. housing starts data spurred concerns about a potential global recession.
“A drawdown of U.S. gasoline stockpiles for a second straight week has reassured investors that demand is resilient, prompting buys,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
“Still, the oil market is expected to stay under pressure, with fairly high volatility, due to worries over a potential global recession,” he said.
U.S. crude and fuel stocks fell in the latest week, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks declined by about 448,000 barrels for the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels, while distillate stocks were down by about 759,000 barrels, according to the sources.
An extended Reuters poll showed on Tuesday that crude inventories probably dropped by around 300,000 barrels last week and gasoline stockpiles likely fell 1.1 million barrels, while distillate inventories rose.
“There are a number of bearish factors and downside risks for oil at the moment, from the threat of recession to the poor data in China and the possibility of a nuclear deal between the U.S. and Iran,” said Craig Erlam, senior market analyst at Oanda.
“But crude has pulled back a long way and we can’t forget that this remains a very tight market in the short term.”