Oil extends gains after US crude stockpiles drop, exports soar

Oil extended gains as a big draw in US crude inventories offset another large interest-rate hike by the Federal Reserve.

West Texas Intermediate (WTI) futures climbed near $98 a barrel after closing 2.4 per cent higher in the previous session. US crude stockpiles dropped by the most since the end of May, while exports rose to a record, according to government data.

The spread between WTI and global benchmark Brent is continuing to widen as a reduction in Russian flows exacerbates market tightness in Europe.

The Fed raised interest rates by 75 basis points for a second month to combat surging inflation, although Chair Jerome Powell said the pace of hikes would slow at some point. Oil has been whipsawed recently as investors weighed concerns over an economic slowdown against signs of tightening markets.

Futures are up around 30 per cent this year despite periods of volatile trading characterized by sharp swings and low liquidity. Supermajors are reporting second-quarter earnings this week and are expected to post bumper profits after energy prices soared.

US crude stockpiles fell by 4.52 million barrels last week, while exports rose to a record 4.55 million barrels a day, according to the Energy Information Administration. Gasoline inventories declined by 3.3 million barrels.