Indicators of a resurgence in U.S. demand maintain oil prices at $100 per barrel

Oil prices dipped slightly on Wednesday, but remained near two-week highs as signals of increased U.S. demand offset dismal economic data and the possibility of Saudi Arabian production cuts kept the outlook optimistic.

Brent oil futures traded in London held close to $100 per barrel, although West Texas Intermediate futures, the U.S. crude benchmark, fell 0.2% to $93.57 per barrel as of 20:14 ET (00:14 GMT).

The American Petroleum Institute reported that U.S. oil inventories fell by 5.6 million barrels during the week ending August 19, which was much greater than the expected reduction of 450,000 barrels.

The official numbers that will be issued later on Wednesday should indicate a decline of 933 thousand barrels. In the week ending August 12, crude oil inventories in the United States dropped by more than 7 million barrels.

Recent data indicating that U.S. crude inventories in the Strategic Petroleum Reserve has fallen to its lowest level in 35 years indicate that U.S. oil consumption is recovering from a recent slump.

The most major driver increasing crude consumption in the United States appears to be a fall in gas prices from record highs.

In contrast, PMI data released on Tuesday revealed that private sector activity in the United States dropped to its lowest level in 27 months as a result of ongoing inflationary pressure and rising inflation rates. A slowdown in U.S. economic development might have a negative influence on petroleum demand in 2022, especially if interest rates continue to rise.

Despite this, oil prices increased by almost 4 percent on Tuesday as Saudi Arabia, the world's largest oil producer, hinted at a probable production cut to boost crude prices.

Indications of progress in the Iran Nuclear Deal, the signing of which is expected to result in the removal of western sanctions against Tehran and the release of more than 1 million barrels per day of supplies onto the market, also coincide with the move.

In the past several weeks, crude oil prices have fluctuated dramatically due to traders' apprehensions about a probable supply surplus as a result of the Iran deal.