Investing.com – Oil prices fell Wednesday, handing back some recent profits despite another outsized draw in U.S. inventories, tensions in the Middle East and potential supply disruptions in Libya.
At 09:00 ET (13:00 GMT), fell 0.9% to $77.92 a barrel, while dropped 0.9% to $74.86 a barrel.
Persistent concern over slowing Chinese demand, coupled with elevated risks of a broader slowdown, have weighed on the crude market for most of this month, and this has prompted a degree of profit-taking Wednesday in the wake of gains of around 7% at the end of last week on expectations that the U.S. Federal Reserve will soon start cutting interest rates.
US inventories shrink more than expected – API
This profit-taking has occured even after data from the showed U.S. oil inventories saw a draw of 3.4 million barrels in the week to August 23, more than expectations for a draw of 3 million barrels.
The data also showed sustained draws in gasoline and distillate stockpiles.
The API data usually heralds a similar reading from , which is due later on Wednesday.
U.S. inventories have fallen for eight of the past nine weeks, driving hopes that demand in the world’s biggest fuel consumer remains strong despite recent signs of cooling in the economy.
But with September comes the end of the travel-heavy summer season, which could see some cooling in U.S. fuel demand.
Middle East, Libya risks buoy crude
Geopolitical risks also saw traders attaching a greater risk premium to oil.
Libya in particular was a key point of focus for markets, after the country’s eastern administration reportedly suspended all oil production amid a growing row over the leadership of the Central Bank of Libya.
The central bank is the only internationally recognized depository for Libya’s oil exports, and is at the center of a brewing conflict between the western and eastern factions.
Libya produced roughly 1.2 million barrels per day of crude in July, with any output disruptions heralding tighter global markets.
In the Middle East, tensions between Israel and Hamas showed little signs of abating after peace talks over the weekend yielded no agreement. Israel and Hezbollah also attacked each other over the past few days.
(Ambar Warrick contributed to this article.)
