Oil prices climbed about 3% on Wednesday as the second straight weekly draw from U.S. crude stockpiles was bigger than expected, offsetting worries that further interest rate hikes could slow economic growth and reduce global oil demand. Brent futures rose $1.77, or 2.5%, to settle at $74.03 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.86, or 2.8%, to settle at $69.56, narrowing Brent’s premium over WTI to its lowest since June 9. The U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw analysts forecast in a Reuters poll and also much bigger than the 2.8 million barrel draw a year earlier. It also exceeded the average draw in the five years from 2018-2022. Some analysts expect the market to tighten in the second half, citing ongoing supply cuts by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, and Saudi Arabia’s voluntary reduction for July.

In China, the world’s second-biggest oil consumer, annual profits at industrial firms extended a double-digit decline in the first five months as softening demand squeezed margins, reinforcing hopes of more policy support for a stuttering post-Covid economic recovery.