Investing.com — Oil prices climbed Wednesday, as larger decline in U.S. weekly crude inventories and ongoing Middle East tensions offset concerns over slowing economic growth and weak demand.
At 14:28 ET (18:28 GMT), rose 2.3% to $78.22 a barrel and gained 2.6% to $75.10 a barrel.
US inventories fall more than expected
Data from the reported Wednesday that stocks fell by 3.7M barrels in the week through Aug. 2., compared with estimates for a 1.6M barrel decline.
But gasoline stockpiles unexpectedly increased by 1.3 million barrels, compared with estimates for a 1.9M barrel decline, while distillates grew 949,000 million barrels larger than the 300,000 barrel build expected.
The build in product inventories suggested that travel demand was cooling as the summer season came to an end.
Middle East tensions in focus
Additionally, traders remained focused on any new developments in the Israel-Hamas war, with Hamas set to potentially retaliate against Israel over the killing of its leader last week.
Fears of a broader conflict in the region have offered some support to crude in recent sessions, as traders feared that an all-out war in the Middle East could disrupt supplies.
U.S. officials have been in constant contact with allies and partners in the region and there is a “clear consensus” that no one should escalate the situation, Secretary of State Antony Blinken said on Tuesday.
Demand, recession fears rattle oil markets
Still sentiment on oil prices remain vulnerable amid fears a U.S. recession will dent oil demand in the coming months.
A slew of weak labor data and purchasing managers index readings from the U.S. furthered this notion over the past week, sparking a rout in most commodity markets.
Oil was already grappling with a weak outlook on demand as the Chinese economy, the largest importer of crude, struggled to show growth, pointing to a market surplus by 2025.
A recent meeting of the Organization of Petroleum Exporting Countries did little to buoy crude, as the cartel signaled no changes to production despite weakness in prices. But top producers Saudi Arabia and Russia did further downplay plans to increase production later this year.
(Ambar Warrick contributed to this article.)