Oil up after data point to declining US stocks

NEW YORK — Oil prices were about 1% higher on Wednesday after a report showed US refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited price gains.

US crude inventories fell 6.50 million barrels last week, government data showed, steeper than the expected decrease of 2.70 million barrels.

Refiners processed nearly 17.60 million barrels of crude, surpassing a record set in May and the most for any week since the US Department of Energy started keeping data in 1982.

Brent crude, the global benchmark, ended the session up 56 cents, or 1.10%, at $ 52.70, after two days of declines. US West Texas Intermediate ( WTI) crude gained 39 cents, or 0.80% to settle at $49.56.

“A drop in crude oil imports and another step up in refinery utilization accounts for the bulk of the decline in crude inventories,” said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington, DC.

“Demand for both gasoline and distillate fuels remains strong but it’s worth noting that gasoline demand should be strong at this time of year and we are drawing closer to the end of summer driving season.”

The data showed gasoline stocks, rose by 3.40 million barrels, confounding expectations in a Reuters poll for a drop of 1.50 million barrels as imports into the East Coast region picked up. Gasoline futures fell about 1% to the lowest in nearly two weeks.

“Whilst the upside to imports into the US East Coast remains limited amidst refinery issues in Europe, interest in shipping gasoline from the US Gulf Coast into PADD 1 appears to have picked- up as we move into the transitioning period between summer and winter specifications,” Energy Aspects said in a note.

From a technical perspective, $ 48.16-$ 48.37 a barrel is a key zone of support for front-month WTI futures, Thompson said.

The drop in US crude stocks also raised hopes that the Organization of the Petroleum Exporting Countries (OPEC)-led output cuts were helping wipe out a three-year global supply glut.

OPEC, Russia and other producers are cutting output by about 1.80 million barrels per day under a deal set to run until March 2018.

The deal has supported prices but an output recovery in Libya and Nigeria, OPEC members exempt from the cut, has complicated the effort. US shale oil drillers have also ramped up production. —