By Katya Golubkova
TOKYO (Reuters) – Oil prices rose in early trading on Wednesday, adding to the previous session’s gains, after industry data showed a surprise drop in U.S. crude inventories last week, a positive sign for the demand, and that attention has shifted away from the hostilities in the country. Middle East.
Brent crude futures rose 9 cents, or 0.1%, to $88.51 a barrel and U.S. West Texas Intermediate crude futures gained 10 cents, or 0.11%, at $83.45 per barrel at 00:31 GMT.
U.S. crude inventories fell by 3.237 million barrels in the week ended April 19, according to market sources citing figures from the American Petroleum Institute. On the other hand, six analysts polled by Reuters expected an increase of 800,000 barrels.
Traders will wait for official US data on oil and product stocks, expected at 10:30 a.m. (2:30 p.m. GMT), to confirm the sharp decline.
At the same time, there are growing expectations that interest rates in the UK and EU will fall in June, which could help support economic growth and, in turn, demand for oil.
In the euro zone and the United Kingdom, business activity this month recorded its fastest pace of growth in almost a year, suggesting that economic growth “continued to accelerate”, said Capital Economics in a note.
“Even though strong pressures on services prices remain upside risks to inflation, we still expect central banks to start cutting rates in the coming months,” the note said.
U.S. business activity slowed in April to a four-month low, with S&P Global reporting Tuesday that its composite production PMI, which tracks the manufacturing and services sectors, fell to 50.9 this month compared to 52.1 in March.
“US business activity in April was at its lowest pace this year,” ANZ Research said in a note. “This could help convince policymakers that rate cuts are necessary to support the economy.”
Traders largely ignored the latest developments in the Middle East at the start of Wednesday’s trading where residents said Israeli strikes intensified on Gaza, in the most intense bombardment in weeks.
(Reporting by Katya Golubkova; editing by Sonali Paul)
