Crude futures rose in Asian trade on Wednesday, rebounding after a sharp fall in the previous session, driven by expectations that US stockpiles could drop for a fourth week straight.
WTI for July gained 36 cents (+0.62%) to $58.39 and Brent for July gained 18 cents (+0.28%) to $63.90 (as of 04:54 GMT). WTI stands for West Texas Intermediate, which is one of the world’s main benchmarks for oil prices, alongside Brent Crude.
On Tuesday WTI dropped $1.69 and Brent fell $1.80. Oil prices have been under pressure on a strong dollar, which many investors believe is an indicator that the Fed will push forward and raise rates later this year.
According to a preliminary survey by Reuters, US commercial crude inventories likely dropped by 2 million barrels last week. A decline in US stockpiles indicates robust demand.
According to The Economic Times:
“Investors have also started taking profits on Brent as hedge funds and money managers cut their bets on rising prices for a second straight week.”
Analysts at BMI Research said in a note:
“Further unwinding of these positions would remove a key pillar of support to prices,”
“This trajectory reinforces our view of downside still to be priced in the oil price in the second half of 2015,” BMI.
BMI expects Brent to average $59 a barrel this year.