- API reports 4.7 million barrel drop in US crude inventories
- Oil supply set to remain tight despite OPEC+ hike-analyst
LONDON: Oil rose towards $75 a barrel on Wednesday ahead of an industry report expected to show US crude inventories fell, bringing the focus back to a tight supply and demand balance rather than rising coronavirus infections.
Official US Energy Information Administration inventory figures are out at 1430 GMT. On Tuesday, two market sources citing American Petroleum Institute figures said crude stocks fell 4.7 million barrels, more than analysts forecast.
"This price catalyst may inject some much-needed momentum into proceedings, especially after the API set a bullish tone," said Stephen Brennock of broker PVM, referring to the EIA report.
Brent crude rose 41 cents, or 0.6%, to $74.89 a barrel at 1337 GMT, after posting on Tuesday its first decline in six days. US West Texas Intermediate (WTI) crude advanced 48 cents, or 0.7%, to $72.13.
Oil has risen 45% this year, helped by demand recovery and supply curbs by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.
OPEC+ agreed to increase supply by 400,000 barrels per day from August, unwinding more of last year's record supply cut, but this is seen as too low by some analysts given the rebound in demand expected this year.
"Oil supply is likely to remain tight even with the production hikes set by OPEC+," said Naeem Aslam of online broker Avatrade.
A rising number of coronavirus cases worldwide, despite vaccination programmes, has limited the upside for oil and remains a concern.
As well as the EIA report, a statement from a US Federal Reserve policy meeting due at 1800 GMT will also be in focus. The dollar was firmer ahead of the meeting, which tends to weigh on oil as it makes crude more expensive for other currency holders.