Investing.com -- Oil prices rose slightly in Asian trade on Thursday as markets weighed signs of a bigger-than-expected draw in U.S. inventories and tighter supplies against fears of rising interest rates.
The minutes of the Federal Reserve’s June meeting showed on Wednesday that almost all members of the central bank supported more interest rate hikes in the coming months, likely heralding more pressure on the U.S. economy.
But fuel consumption in the country appears to have picked up amid the travel-heavy summer season. U.S. crude exports have also ramped up to fill the supply hole left by sharp production cuts by the Organization of Petroleum Exporting Countries, chiefly Saudi Arabia.
Brent oil futures rose 0.2% to $76.73 a barrel, while West Texas Intermediate crude futures rose 0.3% to $71.98 a barrel by 22:00 ET (02:00 GMT).
U.S. oil inventories seen shrinking for third straight week
In continued signs of tighter oil supplies, data from the American Petroleum Institute showed that U.S. oil inventories shrank nearly 4.4 million barrels in the week to June 30, far more than expectations for a draw of 1.8 million barrels.
The draw was also the biggest decline in inventories since late-May, and heralds a similar trend in official inventory data from the Energy Information Administration, due later on Thursday.
Consistent draws in U.S. inventories have boosted hopes that U.S. oil demand is increasing amid the travel-heavy summer season. But somewhat mixed readings on gasoline stockpiles - which is the top fuel product in the country - have tempered this optimism.
Still, signs of tighter supplies helped markets somewhat look past hawkish Fed signals, as well as weak economic indicators from the world’s largest oil importer China.
Both Saudi Arabia and Russia flagged longer and deeper supply cuts earlier this week, in a bid to support crude prices.
Weak China outlook weighs on crude markets
A swathe of recent economic readings from China showed that business activity in the world’s largest oil importer remained under pressure, largely undermining expectations for a Chinese rebound this year.
The weak readings also came amid a potential escalation in a U.S.-China trade war, as Beijing blocked the export of key chipmaking materials to the U.S.
Markets are now fearing any retaliation by Washington, which could further unsettle global trade and economic activity, in turn hurting oil demand.
Weakness in China, coupled with fears of rising U.S. interest rates, has largely undermined bets for a recovery in oil demand this year. Crude prices are still trading down about 10% for the year.