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Oil Holds Three-Day Surge on SPR Refill Plan, Canada Disruption


Oil fell with risk assets ahead of a critical US inflation report and as investors digested a mixed report on supplies from an industry group.

West Texas Intermediate sank toward $73 a barrel after jumping 7.5% over the previous three sessions as the White House said it would begin purchasing crude to replenish the emergency reserves after maintenance work later this year. Gains were also supported by wildfires in Canada that have cut output.

The US consumer price inflation data later Wednesday will be closely watched for a read on the Federal Reserve’s likely interest-rate path in the second half as the economy shows signs of a slowdown that could hurt energy demand. Ahead of the release, equities in Asia declined and copper erased gains.

Crude has retreated this year as worries over Fed tightening and a potential US recession outweighed a solid physical market and supply cuts by the Organization of Petroleum Exporting Countries and its allies. Still, Russian exports have continued to show little sign of ebbing despite Moscow saying its output curbs had almost hit a pledged goal of 500,000 barrels a day.

“The countdown to the US CPI data — which will be a huge determinant for market moves — has put sentiment on edge,” said Yeap Jun Rong, market strategist for IG Asia Pte. Still, the trend in recent months has been for a weaker dollar post-CPI and “if that holds true, oil prices may still find the catalyst for further upside,” he said.

The industry-funded report on oil supplies showed a mixed picture in the US ahead of official data. Nationwide oil stockpiles rose 3.6 million barrels last week, but inventories fell at the key Cushing, Oklahoma hub, the American Petroleum Institute reported, according to people familiar with the figures. The snapshot also pointed to rising gasoline holdings but a drop for distillates.

Data from India, one of the region’s biggest crude importers, showed that diesel consumption swelled to a record last month. That follows recent figures from China that showed unprecedented refining volumes.

The market in China and Asia more broadly is at “an acceptable level of recovery,” Musabbeh al Kaabi, an executive director at Abu Dhabi National Oil Co., told Bloomberg Television on Wednesday.

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Source: Bloomberg

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