Oil rises near 5-month high on shrinking US stockpiles

Bloomberg

Oil climbed to near a five-month high after an industry report pointed to a third straight weekly drop in American crude stockpiles.
Futures in New York rose past $42 a barrel after losing 0.8% Tuesday. The American Petroleum Institute reported inventories fell by 4.01 million barrels last week.
The improving picture in the US overshadowed lingering concerns about the coronavirus’s impact on demand. India’s oil product consumption was still down 12% compared to a year earlier in July, as the nation continues to grapple with the virus, while Japan’s gasoline demand is showing renewed signs of weakening.
Oil has battled its 200-day moving average for the last week, with prices kept in check amid ongoing uncertainty over the trajectory of the demand recovery from the pandemic. At the same time, Opec+ is adding barrels back to the market, though the US picture is more uncertain. The Energy Information Administration (EIA) revised down its production forecast for this year but the Organisation of Petroleum Exporting Countries own forecasts suggest American producers are ramping up output.
“Both crude markers are regaining ground amid expectations for a drop in US oil inventories,” said Stephen Brennock, analyst at PVM Oil Associates Ltd. “Market players are cheering the easing US oil glut but the upside will be capped by nagging fiscal uncertainty in Washington.”
Saudi Arabia will grant the oil supply asked for by refiners next month, while also accommodating some requests for reduced volumes of its lighter grade. Some had sought to take less Arab Extra Light crude with more affordable alternatives available, including crude from the Permian.
American crude production will be 11.26 million barrels a day this year, the EIA forecast, down from July’s 11.63 million estimate. Gasoline and distillates stockpiles also fell last week, the API said, while inventories at the Cushing storage hub rose by 1.1 million barrels.