Oil prices climbed on Wednesday, with the benchmark West Texas Intermediate climbing nearly 6% to US$70.34 per barrels while benchmark Brent Crude gained 5.29% to US$72.25/bbl.

The rise came despite the American Petroleum Institute reporting on Tuesday that US crude oil inventories had increased by 806,000 barrels for the week ending July 16, which contrasts with analyst expectations of an inventory draw down of 4.33 million barrels (MMbbl).

However, the rally in oil prices may prove short-lived, with the two benchmarks already showing dips in after-hours trade after the US government’s Energy Information Administration backed up the API’s findings with its update late yesterday, showing a crude oil build up of 2.1MMbbl for the week to July 16.

This may be alleviated by the EIA estimating that gasoline stocks had decreased by about 100,000 barrels, which reinforces the rebound in US gasoline demand.

Sentiment in the oil market has been bearish following an OPEC+ decision to increase oil supplies from August and concerns that the fast-spreading Delta variant of COVID-19 could spark further restrictions that would dampen oil demand.

That hasn’t been helped by the ongoing spectre that a breakthrough in talks between the US and Iran could result in up to 1.5 million barrels per day of Iranian oil entering the market.

The oil price movements also come amidst continued interest about whether Santos will return to the table with a formal and improved offer for Oil Search after the latter rejected its previous non-binding offer.

Small cap news

Shares in Brookside Energy (ASX:BRK) rose 5.77% this morning after the company said it had increase its SWISH Area of Interest acreage in the world-class Anadarko Basin by 13%.

The new acreage represents an opportunity to improve the already excellent economics of the imminent Rangers Well and to increase the associated proved undeveloped reserves and value.

SWISH AOI currently hosts a prospective resource of 11.6 million barrels of oil net to Brookside.

Meanwhile, AXP Energy (ASX:AXP) has reported net revenue of $4.39m for the quarter ending 30 June 2021 on the back of increased oil, natural gas liquids and gas sales.

That’s up from revenue of $1.73m in the previous quarter due to the June quarter being the first full quarter of production from the company’s new Appalachian Basin asset that was acquired in March.