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U.S. demand recovery supports oil prices by

U.S. demand recovery supports oil prices by

© Reuters.

By Amber Warrick – Oil prices edged lower on Wednesday. However, trading continued near 2-week highs. The black was supported by signs of recovering US demand offsetting weaker economic data. Potential supply cuts from Saudi Arabia also created a cheery outlook.

An ICE-traded barrel was trading at $100 a barrel by 09:26 GMT, while West Texas Intermediate crude, traded on the NYMEX Commodity Futures Exchange in New York, was up 0.1% at $93.86 a barrel.

U.S. crude inventories fell by 5.6 million barrels in the week ended August 19, U.S. data showed. That was more than expected for a fall of 450,000 barrels.

Data due later today should show inventory levels up to 933,000 barrels. U.S. crude oil inventories fell by more than 7 million barrels in the week ended August 12.

Shrinking inventories combined with recent data showing U.S. crude stocks in the Strategic Petroleum Reserve fell to a 35-year low indicate a rebound in U.S. oil demand.

Declining petrol prices from their peak appears to be the most important factor driving the country’s crude oil demand.

In contrast, Tuesday’s U.S. private sector activity showed an ongoing decline inflammationDownward pressure and rising interest rates have dropped to a 27-month low. A slowdown in the US economy, especially if interest rates continue to rise, could weigh on crude oil demand for 2022.

However, oil prices rose nearly 4% on Tuesday after the world’s biggest producer, Saudi Arabia, announced possible supply cuts to support crude prices.

The move comes amid reports of progress on the Iran nuclear deal, the signing of which is expected to lift many Western sanctions on Tehran and start supplies of more than 1 million barrels a day.

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Concerns about the Iran deal have caused violent volatility in crude oil markets in recent weeks. Distributors fear potential oversupply as a result of the deal.