Investing.com – Oil rallied for a fifth-straight day on Wednesday, but global benchmark Brent still settled down for July, signaling demand worries.
U.S. West Texas Intermediate crude settled at $58.58 per barrel, up 53 cents, or 1%, on the day. For all of July, it rose 11 cents, or 0.2%.
London-traded Brent, the benchmark for oil outside of the U.S., settled at $65.17, up 45 cents, or 0.7%, for the session. But for the month, it fell $1.37, or 2.1%.
Week to date, both the crude gauges were up substantially, with WTI showing a 3.4% gain and Brent 1.6%. But with two more sessions to end the week, it was uncertain if the market could retain its upward momentum and how much it would concede if not.
Oil bulls also barely took advantage of a Reuters survey on Wednesday that suggested OPEC oil output hit an eight-year low in July from a combination of sharp Saudi output cuts, squeeze on Iranian crude by U.S. sanctions and and other outages.
Despite OPEC-led cuts, “bulging global oil stocks have failed to decline, and the market remains well supplied", Stephen Brennock of oil broker PVM told Reuters.
Crude prices added to gains after the Energy Information Administration said in its regular weekly report that {ecl-75||U.S. crude inventories}} decreased by about 8.5 million barrels in the week to July 26. That was compared to forecasts for a stockpile draw of just 2.59 million barrels.
U.S. crude stockpiles have fallen for seven-straight weeks now, draining nearly 50 million barrels from inventory.
The EIA also reported that gasoline inventories decreased by almost 1.8 million barrels last week, compared to expectations for a draw of 1.45 million barrels. Distillate stockpiles fell by 894,000 barrels, compared to forecasts for a build of 1.05 million barrels.
Both Brent and WTI also made limited gains after the Federal Reserve announced a widely-expected quarter-point rate cut, the first U.S. interest rate reduction since the 2008.
But even so, the Fed did not immediately indicate if it would cut rates by another quarter percent point in September, as many traders hoped. That was a sign that the gold could retreat from its highs in coming days.
John Hardy, strategist at Saxo Bank, said guidance would be key for markets that want to know whether this will be a one-off cut or the beginning of a series.
“The Fed may not want to encourage asset market froth but, then again, any linking of policy to other factors, like the strong U.S. dollar, would allow the market to draw its own conclusions that the Fed will continue to cut,” he said.
“We’re thinking of it essentially as a mid-cycle adjustment to policy,” Fed Chairman Jay Powell said.
“What you’ve seen over the course of the year as we’ve moved to a more accommodative policy, the economy has performed about as expected with the gradually increasing support,” Powell added. “Increasing policy support has kept the economy on track and kept the outlook favorable.”