Oil Rises as Stockpile Drop Extends Rally Driven by Risk-On Tone

(Bloomberg) -- Oil rose as a drawdown in US crude inventories extended a rally that has been supported by a hot streak for equity markets.

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West Texas Intermediate’s more-active August contract advanced 0.7% to settle above $81 a barrel. Crude was up early in the session as equities gained, and the commodity touched new intraday highs — even as stocks faded — after government data showed US oil stockpiles declining by 2.55 million barrels. An industry report on Tuesday had projected a 2.26 million-barrel increase.

Oil has tracked other assets in recent weeks, but the futures curve is also providing signs of a stronger market, and Brent’s implied volatility has dropped to a six-year low. Still, WTI’s July contract expires Thursday, adding choppiness to prices during the session.

Crude remains on course for a monthly gain after OPEC+ extended supply cuts and said that any subsequent plan to return barrels would hinge on market conditions. Traders are also tracking the demand outlook, with refineries in Asia bringing back some capacity after maintenance despite poor margins.

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