By Noah Browning
LONDON (Reuters) -Oil prices rose on Wednesday on expectations for higher demand as the U.S. dollar weakened and a report showed and gasoline inventories fell, while the release of inflation data could point to a more supportive economic outlook.
futures rose 39 cents, or 0.5%, to $82.77 a barrel at 0630 GMT. U.S. West Texas Intermediate crude futures (WTI) rose 42 cents, or 0.5%, to $78.44 a barrel.
U.S. crude inventories fell by 3.104 million barrels in the week ended May 10, according to market sources citing figures from the American Petroleum Institute on Tuesday.
Gasoline inventories fell by 1.269 million barrels and distillates rose by 673,000 barrels.
U.S. government inventory data due later on Wednesday is also likely to show a decline in crude inventories as refiners increase production volumes to meet increased fuel demand heading into the Northern Hemisphere’s peak season.
Still, the International Energy Agency (IEA) on Wednesday lowered its forecast for oil demand growth in 2024 by 140,000 barrels per day (bpd) to 1.1 million barrels per day (bpd), largely citing weak demand in the developed OECD countries.
“Prices will continue to hover between $80 and $90 through Q2 2024,” said Macquarie’s global oil and gas strategist Vikas Dwivedi.
“After the second quarter, we expect oil prices to turn bearish due to non-OPEC supply growth, shrinking OPEC+ space capacity and weaker-than-expected demand due to persistent inflation.”
US Consumer Price Index (CPI) data will also be released on Wednesday and should provide a clearer indication of whether the Federal Reserve will cut interest rates later this year, which could stimulate the economy and boost fuel demand.
Oil prices also found support from a softer US dollar and concerns about Canadian oil supply.
A major wildfire is approaching Fort McMurray, the hub of Canada’s oil sands industry, which produces 3.3 million barrels of crude oil per day, or two-thirds of the country’s total output.
