U.S. oil prices extended gains on Wednesday on an unexpected stockpile draw and higher gasoline prices, while international crude markets were lagged slightly on the back of low Asian economic growth expectations. Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $45.05 per barrel at 0644 GMT on Wednesday, up 46 cents from their last settlement. Internationally traded Brent futures were a bit weaker in comparison, but still gaining 27 cents to $48.02 a barrel. The recent divergence in American and international markets has cut the discount of the U.S. oil to the Brent global benchmark by nearly two-thirds during the past month to around $2.50 per barrel. "We believe that this could be the market's reaction to the decline in U.S. crude production (drilling) ... further exacerbated as Iranian crude could be entering the market, which puts heavy pressure on the global benchmark," Singapore-based Phillip Futures said. Iranian crude oil that has been stored in tankers could be released quickly to world markets whenever Western sanctions against Tehran are lifted. U.S. crude futures rose after industry group the American Petroleum Institute (API) reported a 3.1 million-barrel crude drawdown last week, versus analyst expectations for a build. A surge in U.S. gasoline prices was also supportive. Official U.S. crude inventory data is scheduled to be released later on Wednesday. Yet outside the United States, international crude markets remained weak largely because of high supplies from the Organization of the Petroleum Exporting Countries (OPEC) clashing with Asia's slowing demand. Australian bank Macquarie said China's economic outlook for the fourth quarter of the year was not convincing. "There are green shoots showing scattered evidence of improvement ... However, as of yet these signs are not broad-based so it's hard to conclude whether they are the beginning of a genuine recovery or just normal economic fluctuations," the bank said. In other commodities markets, coal prices fell to levels last seen before the financial crisis in 2008/2009 as high mining output clashes with falling demand. Markets are keeping a close eye on Washington in the next two days as the U.S. Fed begins a two-day session to decide whether to raise interest rates for the first time in a decade. Higher U.S. interest rates would likely attract cash from money traders, lifting the dollar. That would be seen as a bearish signal for oil as it makes fuel imports costlier for buyers holding other currencies.
