US Oil Inventories Declined More Than Expected Last Week by 5.6 Million Barrels

US crude oil inventories fell more than expected last week, according to the API report released on Tuesday, at a time when many are considering the possibility of production cuts by major oil producers.

US benchmark West Texas Intermediate traded at $93.75 a barrel after rising 3.7% to trade at $93.74 a barrel following the report. US crude oil inventories fell by 5.63 million barrels in the week ended August 19. This compared with a decline of 448,000 barrels reported by the API for the previous week. Economists were expecting a decline of about 3.2 million barrels. API data also showed that gasoline stocks rose by 268,000 barrels last week, while distillate stocks increased by 1.05 million barrels. The official government inventory report to be released on Wednesday is expected to show that US crude oil supply decreased by about 933,000 barrels last week. Oil prices rallied on Wednesday after Saudi Energy Minister bin Salman raised the possibility of production cuts by major oil producers to boost prices. Commerzbank said in a note that Saudi Energy Minister bin Salman's remarks probably signal that the Kingdom is preparing for the possibility that the US "agrees to renew the nuclear deal with Iran, thus allowing Iran to return to the oil market."