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Oil prices have risen again in response to signs of increased fuel demand in the United States.

Oil prices rose slightly on Wednesday as data showed firm fuel demand in the United States, providing some relief after a 5% drop the previous day on fears of demand being harmed by increased China COVID-19 curbs and central bank interest rate hikes.

Oil prices have risen again in response to signs of increased fuel demand in the United States.


A slightly weaker US dollar also supported the market, making oil cheaper for buyers holding other currencies.


WTI crude CLc1 futures in the United States rose 90 cents, or 1%, to $92.54 per barrel at 0306 GMT, after falling $5.37 the previous session due to recession fears.


Brent crude LCOc1 futures for October, which expire on Wednesday, rose 70 cents, or 0.7%, to $100.01 a barrel, reversing a $5.78 loss on Tuesday. LCOc2, the more active November contract, was up 96 cents, or 1%, at $98.80 per barrel


Since the Ukraine conflict began six months ago, price swings have rattled hedge funds and speculators and thinned trading, causing the market to whipsaw even more, as seen on Tuesday.


"I can't emphasize enough that the lack of liquidity means we're in for some volatile moves," Commonwealth Bank commodities analyst Vivek Dhar said.


The American Petroleum Institute (API) reported on Wednesday that gasoline inventories fell by about 3.4 million barrels, while distillate stocks, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended Aug. 26 API/S.


The drawdown in gasoline stocks was nearly triple the 1.2 million barrel drop predicted by eight Reuters polled analysts. They expected a 1 million barrel drop in distillate inventories.

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However, according to API data, crude stocks increased by about 593,000 barrels, compared to analysts' expectations of a drop of about 1.5 million barrels.


Concerns that some of China's largest cities, from Shenzhen to Dalian, are imposing lockdowns and business closures to combat COVID-19 at a time when the world's second-largest economy is already experiencing slow growth capped price gains.


"Worsening COVID-19 outbreaks in China are also weighing on sentiment," ANZ Research analysts wrote in a note.


On the supply side, three sources told Reuters on Tuesday that oil exports from Iraq were unaffected by the worst violence in Baghdad in years. Clashes subsided on Tuesday after powerful cleric Moqtada al-Sadr ordered his supporters to stop protesting.


The main factor supporting prices at the moment is talk from members of the Organization of Petroleum Exporting Countries and allies, known collectively as OPEC+, of cutting output to stabilize the market. The next OPEC+ meeting is scheduled for September 5.


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"They'll jawbone," Dhar predicted. "They'll try to point out that futures prices don't accurately reflect true tightness. However, getting everyone to agree to reduce output is another challenge."

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