Oil prices gain 2% on big decline in US crude storage

By Scott DiSavino

NEW YORK (Reuters) -Oil prices rose about 2% on Wednesday as a bigger-than-expected drop in U.S. crude stockpiles offset worries that further interest rate hikes could slow economic growth and reduce global oil demand.

Brent futures were up $1.31, or 1.8%, to $73.57 a barrel at 11:15 a.m. EDT (1515 GMT), while U.S. West Texas Intermediate (WTI) crude was up $1.40, or 2.1%, to $69.10.

The U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, putting stockpiles down for a second week in a row. [EIA/S]

That was much bigger than the 1.8 million barrel draw analysts forecast in a Reuters poll and compares with a decline of 2.8 million barrels in the same week last year and a five-year (2018-2022) average decrease of 7.8 million barrels.

It also compares with data on Tuesday from the American Petroleum Institute (API), an industry group with its own U.S. inventory report, that showed energy firms pulled about 2.4 million barrels of crude out of storage last week, according to sources. [API/S]

“It is definitely a big draw in crude supplies that is giving the market a boost,” said Phil Flynn, an analyst at Price Futures Group.

“Overall, very solid numbers that kind of fly in the face of people who have been saying that the market is oversupplied. This report could be a bottom (for oil prices),” Flynn said.

Oil prices rose despite worries about interest rate hikes that could slow economic growth and reduce oil demand.

European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will require the bank to avoid declaring an end to rate hikes.

(Additional reporting by Shariq Khan in Bengaluru, Alex Lawler in London and Mohi Narayan in New DelhiEditing by Emma Rumney and Mark Potter)