Oil prices rose as much as 1 per cent on Wednesday, lifting US crude from two-month lows, after the US government reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a glut.
US gasoline prices, however, hit four-month lows after the data from the US Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.
The EIA said crude inventories fell 2.3 million barrels in the week to July 15, close to analysts’ expectations for a decrease of 2.1 million barrels.
“While in line with expectations, the drawdown is large enough to provide support, and refiner demand for crude remains elevated,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Gasoline stocks rose 911,000 barrels, compared with forecasts for stocks to remain unchanged.
Stocks of the motor fuel rose in spite of gasoline output slipping 168,000 barrels per day even as refinery crude runs increased 319,000 bpd, the EIA data showed.
“We continue to see these builds in gasoline which suggest the market is fundamentally not sound to sustain a rally,” said Tariq Zahir, a trader in WTI crude spreads at Tyche Capital Advisors in New York.
Brent crude’s front-month contract, settled up 51 cents, or 1 per cent, at $US47.17 a barrel.
US West Texas Intermediate (WTI) crude’s August contract expired as the front-month after rising 29 cents, or 0.7 per cent, to settle at $US44.94 a barrel. August WTI hit a two-month low of $US43.69 earlier. September WTI, front-month from Thursday onwards, also settled up 0.7 per cent.
Brent’s premium versus WTI
reached its widest since the end of April, enhancing US crude’s export potential.
US gasoline fell nearly 1 per cent to settle at $US1.3637 per gallon. It hit a March low of $US1.3381 earlier.
Oil prices are up nearly 75 per cent since hitting 12-year lows of around $US27 for Brent and about $US26 for WTI in the first quarter. The rally stalled after the two benchmarks breached the $US50 psychological barrier in May amid worries that higher prices will add to production.
Prices had been depressed lately by a glut in motor fuels despite the US peak summer driving season.
“Absolute inventories rose to yet another new all-time record” last week, Kyle Cooper, analyst at IAF Advisors in Houston said, referring to the 2.1 billion barrels of total petroleum supply, including strategic reserve stocks, cited by the EIA.
“Next week may see an increase in refined product output,” he added.