Market Analysis

Oil prices rose in early trading on Wednesday due to large wildfires threatening Canada's oil sands and market expectations of a drawdown in U.S. crude oil and gasoline inventories later in the day.

Brent crude futures increased by 34 cents, or 0.4%, reaching $82.71 per barrel. U.S. West Texas Intermediate (WTI) crude futures rose by 38 cents, or 0.5%, to $78.39 per barrel by 0016 GMT.

A significant wildfire was approaching Fort McMurray, the central hub for Canada's oil sands industry, which produces approximately 3.3 million barrels per day—two-thirds of the country’s total output. Thousands of residents in nearby suburbs were ordered to evacuate.

In the U.S., producer prices rose more than expected in April. Although the likelihood of rate cuts has become less certain, Federal Reserve Chair Jerome Powell indicated that further rate hikes are unlikely.

U.S. consumer prices, along with crude oil and gasoline inventory data, are expected on Wednesday. According to market sources, the American Petroleum Institute (API) reported on Tuesday that U.S. crude oil and gasoline inventories decreased last week.

API data showed crude stocks dropped by 3.104 million barrels for the week ending May 10, gasoline inventories fell by 1.269 million barrels, while distillate inventories increased by 673,000 barrels.

ANZ Research noted, "The lack of progress in reducing inflation continues to diminish expectations of a near-term rate cut. Expectations of another drawdown in U.S. oil inventories should support oil prices."

Meanwhile, in the Middle East, Israeli tanks advanced deeper into Rafah in Gaza, reaching some residential areas where over a million people had sought refuge. Israeli forces also intensified their attacks in northern Gaza, marking some of the fiercest assaults in months.

Paraphrasing text from "Reuters" all rights reserved by the original author.