Falling US stockpiles lift oil to 8-week high
tokyo — Oil traded near an eightweek high above $48 a barrel in New York after US crude stockpiles shrank to the lowest level since the start of the year.
Futures were little changed above $48 a barrel in New York after prices rose 1.8 per cent on Wednesday. American inventories declined by 7.21 million barrels last week to the lowest level since January 6, according to an Energy Information Administration report.
Oil had traded below $50 a barrel since May amid concern rising global output will offset reduced flows from members of the Organisation of Petroleum Exporting Countries and its allies including Russia. While prices have risen above that level as US crude stockpiles continued to decline during a period of strong seasonal demand, nationwide inventories remain almost 100 million barrels above the five-year average.
“We will get inventory draws during the summer that are supportive of firmer prices,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. “But gains are capped for two key reasons. The first is the basic truth of supply growth elsewhere — US shale, Libya and Nigeria — and the second the strong propensity of US shale to hedge as oil prices near $50.”
West Texas Intermediate for September delivery was 12 cents lower at $48.63 a barrel on the New York Mercantile Exchange at 10.03am London time. Total volume traded was about 9 per cent below the 100-day average. Prices gained 86 cents to $48.75 on Wednesday, the highest closing level since May 30.
Brent for September settlement fell 15 cents to $50.82 a barrel on the London-based ICE Futures Europe exchange. Prices gained 1.5 per cent to $50.97 on Wednesday. The global benchmark traded at a premium of $2.20 to WTI.
US inventories fell to 483.4 million barrels, the lowest level in more than six months and more than the median 3 million barrel drop expected in a Bloomberg analyst survey. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, also slipped for a 10th week, according to the EIA data. — Bloomberg