NEW YORK - Oil prices jumped on Wednesday, rebounding after several days of weakness as a much bigger-than-expected drawdown in U.S. gasoline and diesel inventories augured for a coming seasonal increase in refining demand.
Looming U.S. sanctions on oil exporter Iran helped support prices, but traders remained concerned about the worldwide energy demand outlook. On Tuesday, oil prices slumped 5 percent on concerns tied to a weaker economic outlook.
U.S. West Texas Intermediate crude futures rose $1.08 to $67.52 a barrel, a 1.7 percent gain, as of 12:08 p.m. EST (1608 GMT). Brent crude rose 82 cents to $77.25 a barrel. The global benchmark had fallen earlier to a session low of $75.11, the lowest since Aug. 24.
U.S. gasoline futures rose 0.9 percent to $1.853 a gallon.
The U.S. Energy Department said gasoline stocks fell 4.8 million barrels to 229.3 million barrels last week, the lowest since December 2017. Distillates, which include diesel, were down 2.3 million barrels, both more than forecast.
The EIA data also showed U.S. crude inventories rose 6.3 million barrels, much more than the 3.7 million-barrel increase expected in a Reuters poll. [EIA/S]
"The headline number was a little bearish on crude but with the drop in gasoline supplies and an uptick in refinery runs, the market is holding in there pretty good," said Phil Flynn, analyst at Price Futures Group in Chicago.
Refining utilization rose modestly. Flynn said that signaled that maintenance season is coming to a close, and refiners will begin to process more diesel and heating oil as winter approaches.
Prices had slumped as forecasters such as the International Energy Agency predicted slower oil-demand growth for 2019. [IEA/M] Weakness in equities has also weighed on crude. [.N]
"Notwithstanding the last few days of selloffs in equities, I need to see a lot more evidence before we can start talking about a slowodwn in demand," said Joe McMonigle, senior energy policy analyst at Hedgeye in Washington.
With U.S. sanctions on Iranian exports due to take effect on Nov. 4, two people with knowledge of the matter said two Chinese state-owned refiners were not planning to load Iranian oil for November.
Still, Saudi Energy Minister Khalid al-Falih said on Tuesday that Saudi Arabia would step up to "meet any demand that materializes to ensure customers are satisfied".
Some analysts say prices could rebound before the end of the year.
"We still see Brent reaching $85 per barrel by year-end," said U.S. bank Morgan Stanley.