Oil Gains on Report That Stockpile Draw Was Larger Than Expected
(Bloomberg) -- Crude swung higher after an industry group reported a larger decline in U.S. crude stockpiles than expected.
Futures in New York climbed from the settlement on Tuesday after the American Petroleum Institute was said to report U.S. crude inventories shrank by 5.17 million barrels last week. That compares to a Bloomberg survey of analysts showing a 2 million-barrel-drop in supplies before Wednesday’s scheduled release of Energy Information Administration data.
There are “expectations for imports to pull back a little after a couple of high weeks and exports to rebound,” said Kyle Cooper, a consultant at ION Energy. “Whether or not the EIA confirms it, is still highly suspect.”
During the session, crude rose the most in two weeks as a U.S. plan to sell 11 million barrels of oil from its emergency reserve highlighted concerns about tightening global supplies and a weakening greenback boosted the appeal of dollar-denominated commodities.
“The strength is really primarily from the weak dollar, and also you’re getting another week of expectations that you will see crude stocks drop,” said Gene McGillian, manager of market research at Tradition Energy. “The fundamental picture is tighter than it was a year ago.”
The U.S. benchmark crude has declined about 2 percent this month as the U.S.-China trade war heightened concerns about energy demand. Talks between the world’s two economic powerhouses are scheduled for August 22 and 23, according to the the Wall Street Journal. Meanwhile, Chinese shipowners already are shunning Iranian oil; OPEC’s No. 3 producer is using its own tankers to supply top customers.
West Texas Intermediate crude for October delivery traded at $66.07 a barrel at 4:42 p.m. after ending the session at $65.84 a barrel. Total volume traded Tuesday was about 45 percent below the 100-day average. WTI for September delivery expired at $67.35 on the New York Mercantile Exchange.
WTI touched its 200-day moving average last week and has bounced off the key level since then.
“You’re seeing somewhat of a relief rally here and part of it is technical in nature for crude,” with oil bouncing off the $65 level and 200-day moving average, said Rob Haworth, who helps oversee $151 billion at U.S. Bank Wealth Management in Seattle.
Brent for October delivery advanced 42 cents to settle at $72.63 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.79 premium to WTI for the same month.
The Bloomberg Dollar Spot Index fell for a fourth day.
The API was also said to report crude supplies in Cushing, Oklahoma, rose 195,000 barrels last week. Gasoline inventories fell 930,000 barrels, while distillate stocks increased 1.76 million barrels.
Inventories at the Cushing storage hub rose by an estimated 900,000 barrels last week, according to a forecast compiled by Bloomberg.
Other oil-market news:
- Gasoline futures added 0.1 percent to settle at $2.0179 a gallon, the highest level in a week.
- The Saudis are seeking to cap the upside in prices in response to consumer concerns, and also put a floor under them to ensure high revenues, according to a report from the Oxford Institute for Energy Studies.
©2018 Bloomberg L.P.