Oil prices rose nearly 2% on Wednesday after a favorable U.S. inventory report from the Energy Information Administration (EIA), an OPEC agreement to taper the production cuts, and assurances from U.S. President Trump that Washington will not levy sanctions on China for its treatment of Hong Kong.
Oil price futures were up more than 2% on Wednesday, with spot prices for WTI up 1.71% at $40.98 at 6:30pm EDT. Brent crude was trading up 1.75% at $43.65.
The news piggybacked on the good news from the EIA, which on Wednesday confirmed the API's report a day earlier that crude oil stocks in the United States had fallen by more than 7 million barrels. This is attributed to fewer crude oil imports from Saudi Arabia.
OPEC on Wednesday added to the upward price momentum despite the fact that it agreed to ramp up production once again, with the market interpreting the move as OPEC's confidence in the upswing in crude oil demand.
The extra production that OPEC will start pumping into the market in August will not directly affect U.S. inventories for another couple of months.
The final positive influencer for oil prices was the administrative stay that a court handed down to Energy Transfer Partners for the Dakota Access Pipeline to continue to operate while the case is tried in court.
Oil prices have been pressured since the start of the coronavirus pandemic in the United States, compounded by the oil price war between Saudi Arabia and Russia that shoveled more crude oil into the markets than a demand-shocked market could handle.
Oil and gas companies have been longing for the restoration of oil demand as the coronavirus lockdowns lift, while an increase in the number of new coronavirus cases in the United States over the last couple of weeks has continued to quash any price rally.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More