US oil prices extended gains in Asia on Wednesday on an unexpected stockpile draw and higher gasoline prices, while international crude markets remained weak on the back of low growth expectations.
Australian bank Macquarie said that China’s economic outlook for the fourth quarter of the year was muted.
“There are green shoots showing scattered evidence of improvement … However, as of yet these signs are not broad-based so it’s hard to conclude whether they are the beginning of a genuine recovery or just normal economic fluctuations,” the bank said.
The recent divergence in American and international markets has reduced the discount between U.S. and global crude benchmarks <WTCLc1-LCOc1> by almost two thirds during the past month to around $2.50 per barrel.
U.S. crude futures rose after industry group the American Petroleum Institute (API) reported a 3.1 million-barrel crude drawdown last week, versus analyst expectations for a build. A surge in American gasoline prices was also supportive.
Yet outside the United States, international crude markets were weaker largely because of high supplies from the Organization of the Petroleum Exporting Countries (OPEC) clashing with slowing demand, especially in Asia.
Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $44.86 per barrel at 0300 GMT on Wednesday, up 27 cents from their last settlement. Internationally traded Brent futures were virtually unchanged from their last close, trading at $47.73 a barrel.
Oil markets will be keeping a close eye on Washington policymakers in the next two days as the U.S. Fed begins a two-day session to decide whether it will raise interest rates for the first time in almost a decade.
Higher U.S. interest rates would likely attract cash from money traders, lifting the dollar. That would be seen as a bearish signal for oil as it makes fuel more expensive for importers who hold other currencies.