Oil prices hit one-week high after a sharp drop in US crude stocks

Oil prices rose in European trade on Wednesday on track for the second profit in a row, scaling a one-week high after a sharp drop in US crude stocks according to initial data from the American Petroleum Institute. 

Now traders await official inventory data later today from the Energy Information Administration amid expectations inventories will decline for the third week in a row. 

Global Oil Prices

US crude rose 0.75% to $81.85 a barrel, while Brent declined 0.65% to $85.49 a barrel.

US crude rose 1.7% on Tuesday while Brent rose 1.4% as the dollar lost ground.

US Stocks

Initial data from the American Petroleum Institute showed a drop of 11.5 million barrels in US crude stocks in the week ending August 25, the third weekly decline in a row, passing estimates of a 2.5 million decline.

According to the data, total stocks fell to 437 million barrels, the lowest since December 2022, in a positive sign of demand.

Now traders await official data from the EIA, still expected to show a decline of 2.2 million barrels.

US Dollar

The dollar index fell 0.3% on Wednesday, sharpening losses for the third session and plumbing a one-week trough.

A weaker dollar underpins commodities and oil and they become cheaper to holders of other currencies. 

Recent US disappointing data on US private sector employment and GDP growth hurt chances of another 0.25% interest rate hike at the November meeting.