Despite data showing a massive drop in crude stockpiles in the U.S. in the week ended July 28, oil prices fell on Wednesday amid concerns about outlook for demand.
West Texas Intermediate Crude oil futures for September ended lower by $.88 or about 2.3% at $79.49 a barrel.
Brent crude futures settled at $83.20 a barrel, losing $1.71 or about 2%.
Data from the Energy Information Administration (EIA) showed crude inventory in the U.S. dropped by 17.049 million barrels in the week ended July 28, substantially larger than an expected drop of just about 1.37 million barrels.
The EIA data also showed gasoline inventory rose by 1.480 million barrels last week, while distillate stockpiles dropped by 0.796 million barrels.
the EIA also said U.S. crude oil refinery inputs averaged 16.5 million barrels per day during the week ending July 28 , up 0.04 million barrels more than the previous week’s average.
According to a report released by the American Petroleum Institute (API) on Tuesday, U.S. oil inventories fell by 15.4 million barrels last week, adding to signs the market is tightening.
“A strong dollar is getting in oil’s way, but that should only lead to limited downside given how good both the supply and demand fundamentals have become,” says Edward Moya, Senior Market Analyst at OANDA.
“WTI crude’s decline below the $80 level should be short-lived, but if momentum selling kicks in, prices could test the $77 region,” Moya adds.
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