Oil Rises as Shrinking U.S. Crude Stockpiles Signal Tightness
(Bloomberg) -- Oil climbed as plunging crude and gasoline inventories in the world’s biggest economy heightened supply concerns.
Futures advanced 1.1 percent in New York on Wednesday. Nationwide crude stockpiles dropped to the lowest since 2015 last week and gasoline supplies fell for a fourth week, according to the Energy Information Administration. The bullish nature of the data was tempered by the fact that more than 70 percent of the inventory decline occurred in U.S. western markets that are too isolated to have much impact on the rest of the nation.
“They tend to put a little less weight on that type of inventory draw,” said Craig Bethune, a senior portfolio manager at Manulife Asset Management. But still, the report “is still a net positive relative to the past few.”
Meanwhile, renewed concern about President Donald Trump’s use of tariffs to batter trading adversaries briefly stunted Wednesday’s rally. Shortly after the EIA report was released, global markets were rocked by headlines that U.S. President Donald Trump may slap tariffs on auto imports by the end of this year. Such levies could exacerbate measures Trump has already set in motion against China, the world’s second-biggest economy.
“There continues to be concern about tariffs and the impact it’s going to have on the global economy,” said Rob Thummel, managing director at Tortoise, which manages $16 billion in energy-related assets. “The broader market is becoming more concerned now about these tariffs.”
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West Texas Intermediate crude for September delivery added 78 cents to settle at $69.30 a barrel on the New York Mercantile Exchange. Total volume traded Wednesday was about 22 percent below the 100-day average.
Brent for September settlement rose 49 cents to end the session at $73.93 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $4.63 premium to WTI.
The EIA also reported distillate supplies dropped, while oil inventories stored at the key Cushing, Oklahoma, pipeline hub dropped to the lowest since 2014. Crude exports jumped, contributing to the overall crude withdrawal.
Other oil-market news:
- Gasoline futures added 1.3 percent to settle at $2.1231 a gallon.
- Top OPEC member Saudi Arabia is shipping U.S. crude produced in the Gulf of Mexico to Asia at a time when No. 1 buyer China is snubbing American cargoes.
- Exports of North Sea crudes to the Mediterranean have reached a year-high so far this month, after supply outages in Libya facilitated the flow, according to shipping data and traders.
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