Crude Edges Up as Fuel Supply Drop Outweighs Rising Crude Stocks
Oil slipped below $68 a barrel toward its lowest level in almost a month.
(Bloomberg) -- Crude rose as investors assessed conflicting supply-and-demand signals in the world’s biggest economy.
Futures in New York wavered between gains and losses during the session before settling 1 percent higher on Wednesday. Gasoline held in U.S. storage tanks dropped by the most since May and fuel demand increased, according to data from the Energy Information Administration. Those factors overshadowed the biggest increase in American crude inventories since April.
“This is what happens when you get the largest imports we’ve had during the year and the lowest exports we’ve had for three months,” said Rob Thummel, managing director at Tortoise, which manages $16 billion in energy-related assets. “The lone positive for the bulls is the gasoline draw was very strong. Obviously, gasoline demand seemed to bounce back this week.”
The surprise jump in U.S. crude inventories occurred against the backdrop of looming production increases from Saudi Arabia, Russia, Libya and other major sources. During a meeting in Vienna on Wednesday, OPEC and allied producers discussed how much individual nations plan to produce this month but didn’t go so far as to formally share out a planned output increase across the cartel, according to people familiar with the matter.
West Texas Intermediate crude for August delivery added 68 cents to settle at $68.76 a barrel on the New York Mercantile Exchange, the biggest gain in more than a week. Total volume traded was about 25 percent below the 100-day average.
Brent for September settlement rose 74 cents to end the session at $72.90 on the London-based ICE Futures Europe exchange, and traded at a $5.15 premium to WTI for the same month.
U.S. WTI hovered just above its 100-day moving average after London’s Brent settled below that level on Monday for the first time since March.
The EIA reported U.S. crude inventories rose by 5.84 million barrels last week, confounding most analysts in a Bloomberg survey who were forecasting a decline. Purchases of foreign oil jumped the most since the start of 2017, while crude exports slid for a third week, contributing to the inventory build.
“We saw a decent draw in gasoline stocks, which is supportive of strong demand in the current summer driving season,” said Matthew Beck, managing director of an $8 billion oil and natural gas portfolio at John Hancock Financial Services Inc. in Boston.
Other oil-market news:
- Gasoline futures rose 0.9 percent to settle at $2.0444 a gallon on Wednesday.
- OPEC and non-OPEC compliance with output cuts was at 121 percent in June, according to the Joint Ministerial Monitoring Committee, which will hold a teleconference meeting on August 20th.
- OPEC is consulting with lawyers to prepare a strategy to defend against proposed U.S. legislation that could open the cartel up to antitrust lawsuits, according to people familiar with the matter.
--With assistance from Grant Smith.
To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Joe Carroll, Will Wade
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