U.S. crude oil prices continued to add to the previous day’s gains Wednesday, with West Texas Intermediate (WTI) futures trading at $48.37 a barrel at 3:44 a.m. EDT. Oil prices, long pummeled by a massive global glut, have been showing signs of recovery in recent weeks on the back of sustained demand, unexpected disruptions in output, and expectations of a drop in U.S. crude stockpiles.
Investors and traders are now awaiting the U.S. Energy Information Administration’s (EIA) oil inventory data, due at 10:30 a.m. EDT Wednesday, which is likely to show a second consecutive week of decline.
According to a Reuters poll, U.S. crude inventories are expected to have dropped 2.8 million barrels last week compared to the week before, when inventories shrunk by 3.4 million barrels.
If the data is as expected, it would further boost WTI and Brent crude prices that have, in recent days, been pushed closer to the $50 a barrel mark due to supply disruptions in Canada and Nigeria.
“Supply outages continue to be the key short-term driver for the crude complex, with Canadian and Nigerian production still facing difficulty,” Robbie Fraser, commodity analyst at Schneider Electric, told MarketWatch. “The combination of those outages alongside stronger than expected demand growth, particularly from China, has at least temporarily removed excess supply from the market.”
Oil prices began rising last week, when the International Energy Agency said that global oil markets were heading toward a balance despite a faster-than-expected rise in Iran’s oil output. In its monthly oil market report, the IEA said that in the second half of the year, oil stocks are expected to witness a drastic slide and reduce the gap between supply and demand to just 200,000 barrels a day — down from 1.3 million barrels a day in the first six months of the year.
At 3:44 a.m. EDT Wednesday, Brent crude — the international oil benchmark — was trading at $49.38 a barrel, close to the over six-month high of $49.75 it reached Tuesday.