Oil prices bounce back on Wednesday from earlier losses after data showed a huge falloff in U.S. crude inventories, a comfort that was attained after several days for investor’s declines founded on the slow pace of global efforts to reduce a glut.
The U.S. Energy Department said that there was a drop of 3.6 million barrels of crude stocks last week that was over double than expected, juicing the buying in the market.
U.S. crude futures slipped in six of the last seven days, as investors became impatient with high inventories after the deal by the producers of the world’s major oil to cut output.
The U.S. government data counters the report of Tuesday from industry group that showed an unexpected build in inventories.
However, there was a growth in the gasoline and distillate stock, while U.S. production and imports also showed an increase, that the path for higher prices remains tentative, said analysts.
The oil prices gains were offset by a drop in blendstock gasoline reformulated prices, which dropped by 1.3 percent to $1.5999 a gallon and this happened after gasoline inventories rose sharply.
Analysts have showed their concern about weak gasoline demand, and said it may weight on crude prices in the future weeks if consumption fails to rise. In January, the gasoline sales by refiners were down by 6 percent from earlier year, the latest EIA data available.
“The market has all doubts about OPEC’s ability to attain a successful extension of the current deal with Russia , yet adopting a to ‘wait and see’ approach,” said Ole Hansen, head of commodity strategy at Saxo Bank.