Crude oil futures were higher in mid-morning trade in Asia Wednesday on the back of a larger-than-expected drop in US oil inventories reported by an industry group.
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At 10:55 am Singapore time (0255 GMT), front-month ICE Brent September futures were up 66 cents/b (1.02%) from Tuesday's close at $64.82/b, while the NYMEX August light sweet crude futures contract was 85 cents/b (1.47%) higher at $58.67/b.
"Big crude draw should set the stage for a rebound," said Phil Flynn of the Price Futures Group in a note to clients, citing the 8.129 million-barrel draw in US crude inventories in the week to July 5 reported by the American Petroleum Institute overnight.
The broader market would be looking for confirmation of the draw in official data due for release by the US Energy Information Administration later Wednesday.
ICE Brent crude oil futures are up more than 20% for the year but nearly $10/b off their highs in April over uncertainty over the impact of US-China trade tension on the pace of global economic growth and subsequently oil demand.
More recently, oil prices have found support in an agreement between OPEC and its partners to extend 1.2 million b/d in output cuts that were due to lapse at end June. Growing tensions in the Middle East have also provided a floor for prices.
"Energy prices were stuck in a tug-of-war between slowing economic growth concerns and risks of supply disruptions in the Middle East," ANZ Research analysts said in a note to clients.
Oil traders will also be closing watching for cues on a US interest rate cut following overnight gains in the US dollar, on expectations of a more dovish stance being taken by the Federal Reserve. A stronger US dollar is typically seen as bearish for oil prices as it makes USD-denominated oil more expensive for buyers in other currencies.
"Investors are essentially now awaiting Fed chair Powell's congressional testimony to the House of Representatives today [Wednesday] and the Senate tomorrow, coupled with the June FOMC minutes also due today and ECB minutes to follow tomorrow," OCBC analysts said in a note to clients.
As of 0300 GMT, the US Dollar Index was up 0.02% at 97.115.
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