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Oil jumps 4% to the highest in 5 months after the EIA reports an inventory drop

Carmen Reinicke   

Oil jumps 4% to the highest in 5 months after the EIA reports an inventory drop
Stock Market1 min read

Oil prices gained Wednesday to their highest levels since March after the US Energy Information Administration reported that crude inventory fell last week.

US commercial crude oil inventories decreased by 7.4 million barrels in the week ending July 31, the EIA said Wednesday. Analysts had expected a much smaller draw of 2.3 million barrels.

West Texas Intermediate crude gained 4.4% to $43.52 per barrel, while international benchmark Brent crude rose 4.1% to $46.23 per barrel at intraday highs.

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Oil prices have struggled to gain this year amid the coronavirus pandemic, which severely hit demand for the commodity at the same time that a price war between OPEC and its allies threatened to boost output, lowering prices.

As economies around the world reopen following coronavirus lockdowns, demand for oil and prices have recovered some of the lost ground.

Still, the recent momentum may not continue, especially as economic conditions in the US look less certain.

"WTI crude is starting to break away from its tight trading range, but that will not continue if the US economic recovery falters and the job creation flatlines," said Edward Moya, senior market analyst at OANDA, in a Wednesday note. "WTI crude's bullish momentum should fizzle ahead of the $45 level and until after Friday's non-farm payroll report."

Oil is down more than 25% year-to-date.

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