Investing.com-- Oil prices rose slightly in Asian trade on Wednesday, extending a rebound from the prior session as the prospect of tighter supplies helped markets look past concerns over rising interest rates and their impact on the economy.
Industry data showed a drop in U.S. fuel and distillate inventories, indicating that fuel consumption in the world’s largest economy remained consistent, despite the end of the travel-heavy summer season.
The data came on the heels of a fuel export ban in Russia, which is set to tighten fuel supplies in large swathes of Europe and Asia. Recent crude production cuts by Saudi Arabia and Russia, which are set to continue until the end of the year, also pointed to substantially tighter oil supplies in the coming months.
The prospect of tighter supplies helped support oil prices, even as markets grew increasingly concerned over future demand amid signals of higher interest rates from the Federal Reserve.
Strength in the dollar- which surged to a 10-month high this week- limited any major gains in oil prices.
Brent oil futures rose 0.2% to $92.68 a barrel, while West Texas Intermediate crude futures rose 0.3% to $90.69 a barrel by 20:36 ET (00:36 GMT).
API data shows shrinking gasoline, distillate inventories
Data from the American Petroleum Institute showed on late-Tuesday that U.S. crude stockpiles grew nearly 1.6 million barrels (mb) in the week to September 22, rising slightly after a 5.3 mb tumble in the prior week.
Gasoline and distillate inventories fell 0.07 mb and 1.7 mb, respectively, indicating that fuel demand in the country remained steady.
The API data acts as a precursor to official inventory data, which is due later on Wednesday. But the reading still painted a tight picture of U.S. crude markets.
Analysts are expecting the official data to show a 1.7 mb drop in inventories after a 2.1 mb draw in the prior week.
Stronger dollar, Fed fears limit bigger rebound
While crude prices were still trading close to their strongest levels for the year, markets questioned just how much further they could rise, amid pressure from a stronger dollar and growing fears of more rate hikes from the Fed.
Supply cuts from Russia and Saudi Arabia saw oil prices rally over 30% in the last two months. But they appeared to have run out of momentum in recent weeks, hovering between $89 and $95 a barrel.
Markets fear that rising rates will dent economic activity and in turn stymie crude demand. Hawkish signals from the Fed were a key point of support for the dollar.
Concerns over China also kept oil prices relatively subdued, amid fresh headwinds to the country's key property sector. China business activity data is also on tap this week.