Oil prices rose on Wednesday on data from the US government showing a decline in domestic crude inventories to levels not seen since February 2015. Getty Images photo by Daniel Acker.
US oil prices up over 1 per cent
Oil prices rose on Wednesday on data from the US Energy Information Administration that showed US crude stocks have fallen to their lowest level since February 2015.
By 1:53 p.m., EDT, Benchmark Brent crude futures were up 62 cents to $74.42/barrel and US West Texas Intermediate futures rose 95 cents to $69.47/barrel. The Canadian Crude Index climbed 63 cents to $41.37.
The EIA reported US crude inventories fell by 6.1 million barrels last week to 404.9 million barrels. Analysts polled by Reuters prior to the release of the weekly data had predicted a drop of 2.3 million barrels.
As well, the EIA reported that crude stocks at the Cushing, Oklahoma delivery hub were down by 1.1 million barrels, the lowest since November 2014.
“The decrease puts the focus once again on tightening supplies here in the U.S. and it also puts the focus on the fact that U.S. gasoline demand is going through the roof,” Phil Flynn, analyst at Price Futures Group told Reuters.
EIA data showed gasoline inventories dropped by 2.3 million barrels. US Midwest gasoline stocks fell to their lowest seasonally since 2015.
Oil price gains were limited, however, because most of the inventory draw was in the West Coast region, known as PADD 5. According to Reuters, stocks in this area were down to levels not seen since December 2011.
John Kilduff told Reuters that the market often discounts large inventory drawdowns that are concentrated on the West Coast because the region is seen as being isolated from overall US supply-demand fundamentals.
“PADD 5 is just not as critical to the overall inventory situation,” Kilduff said.
An International Monetary Fund report showed crippling inflation in Venezuela has cut the country’s ability to increase its oil output.
“Venezuelan oil production has already plummeted to a new 30-year low of 1.5 million barrels a day in June,” Stephen Innes, a trader at brokerage OANDA told Reuters.
As well a burbling trade dispute involving the United States and China as well as a number of US trading partners has left the market jittery due to the possibility of slower economic growth and weaker global energy demand.
But, so far, the global economy continues to grow and it is not clear how the ongoing trade war could impact business.
On Tuesday, China announced it will increase spending on infrastructure which helped ease tensions concerning China’s demand for crude.