Oil prices were up on Wednesday after data showed a large drop in US crude inventories and as investors weighed the potential impact of new tariffs on India by the US.
Brent crude futures appreciated by 83 cents or 1.2 per cent to $68.05 a barrel and the US West Texas Intermediate crude futures gained 90 cents or 1.4 per cent to trade at $64.15 per barrel.
US crude inventories dropped by 2.4 million barrels to 418.3 million barrels last week, the Energy Information Administration (EIA) said.
The build brings commercial stockpiles to 418.3 million barrels, according to government data, which is 6 per cent below the five-year average for this time of year.
The EIA’s data release follows figures from American Petroleum Industry (API) that were released a day earlier, which suggested that crude oil inventories contracted by 974,000 barrels.
US gasoline (petrol) stocks fell by 1.2 million barrels compared with expectations for a 2.2 million-barrel draw. Distillate stockpiles, which include diesel and heating oil, fell by 1.8 million barrels, the EIA data showed.
US President Donald Trump’s doubling of tariffs on imports from India to as much as 50 per cent also impacted prices. The tariffs in response to India’s purchases of Russian oil took effect on Wednesday.
According to India’s Finance Ministry in its July monthly economic review, released on Wednesday, while the immediate impact of US tariffs on Indian exports appears limited, the ripple effects on the economy pose challenges that must be addressed.
Regardless, market watchers expect India to maintain Russian purchases, at least in the near term.
Market analysts noted that uncertainty over whether the US will target the oil flows is deterring some traders from taking new positions.
Russia and Ukraine have also stepped up attacks on each other’s energy infrastructure, worrying traders about supply disruptions. Russia launched a massive drone attack on energy and gas transport infrastructure across six Ukrainian regions overnight, Ukrainian officials said on Wednesday. Ukraine struck Russian oil refineries and exporting infrastructure in recent days.
These developments happen as the US steps up efforts to end the war which began in February 2022.
Russia has made an upward revision to its crude oil export plan from western ports by 200,000 barrels per day in August from the initial schedule after attacks on its refineries last week.
There is also focus on whether the US Federal Reserve will make a cut at the September 16-17 meeting. Lower interest rates can reduce consumer borrowing costs and boost economic growth and demand for oil.