Bloomberg
Oil prices turned higher on Wednesday after a U.S. government report revealed a bigger-than-expected decline in domestic crude supplies, which was the largest one-week drop since the end of March.
Price gains for oil, however, were limited as the Energy Information Administration report Wednesday also showed a sizable weekly climb in total U.S. crude production and recent data offered evidence of a pickup in output from the Organization of the Petroleum Exporting Countries.
U.S. benchmark July West Texas Intermediate crude edged up by 16 cents, or 0.2%, to $66.52 a barrel on the New York Mercantile Exchange. It was trading around $66.12 before the supply data. August Brent crude the global benchmark, rose 44 cents, or 0.6%, to $76.32 a barrel on ICE Futures Europe.
The U.S. Energy Information Administration reported Wednesday that crude supplies fell by 4.1 million barrels for the week ended June 8. That was the biggest one-week drop since the 4.6 million-barrel decline reported for the week ending March 30. Analysts surveyed by S&P Global Platts had forecast a decline of 2.6 million barrels, while the American Petroleum Institute on Tuesday reported a climb of 833,000 barrels.
“Refinery runs at their highest level for the year—and above year-ago levels for the first time since mid-April—have encouraged a solid, yet seasonal draw to crude stocks, with additional bullish hues added to the report by draws to both gasoline and distillates,” said Matt Smith director of commodity research at ClipperData.
“On the demand side of the picture, total products supplied showed a return to form, while on the supply side, domestic production continues to reflect a rampant rise,” he said.
Total domestic crude production climbed by 100,000 barrels a day to a fresh weekly record of 10.9 million barrels a day, the EIA report showed.
Gasoline stockpiles declined by 2.3 million barrels for the week, while distillate stockpiles fell 2.1 million barrels, according to the EIA. The S&P Global Platts survey forecast a supply rise of 200,000 barrels for gasoline, and expected distillate stocks to be unchanged.
On Nymex, July gasoline climbed by 1.4% to $2.12 a gallon, while July heating oil tacked on 0.6% to $2.175 a gallon.
July natural gas traded at $2.975 per million British thermal units, up 1.3%, a day ahead of an EIA update on supplies of the fuel.
Also Wednesday, a monthly report from Paris-based International Energy Agency said that the group expects crude demand to grow by 1.4 million barrels a day in 2019, on par with expectations for 2016, with petrochemicals accounting greatly for that raised outlook.
“Together with strong economic growth, the development of the petrochemical industry world-wide will underpin growth in oil demand,” the report read.
The IEA also cautioned that oil production from regions outside of the remit of OPEC, notably in the U.S., was set to increase. However, the organization said it expected projections for non-OPEC output to slow slightly next year to 1.7 million barrels a day, compared with expectations for 2 million barrels a day this year.
The report comes after a separate monthly report from OPEC Tuesday that showed member increased by 35,000 barrels a day in May, month-on-month, to average 31.87 million barrels a day. Production in Saudi Arabia jumped by 85,500 barrels a day but was partly offset by production outages in Nigeria, Venezuela and Libya, the report said, citing secondary sources.
A gathering of OPEC members set for June 22 was also factoring in trading. The meeting could determine the outlook for production curbs after an uptrend since late last year was underpinned by a coordinated effort to tamp down a global glut of crude and stabilize a downturn in oil futures from a 2014 peak.
—Christopher Alessi contributed to this article