The data reverses losses from the previous week’s figures which showed an increase in gasoline stock, sending prices tumbling into a bear market as both futures fell more than 20 per cent from June peaks of near US$50 a barrel.
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Gasoline supply in the USA dropped by 3.3 million barrels last week, far below the market estimate of a 200,000-barrel decline, US Energy Information Administration (EIA) reported Wednesday.
Total motor gasoline inventories declined by 3.3 million barrels last week, but are still “well above the upper limit of the average range”, the EIA said. Signs of increased fuel demand appear to be enough to spark a rally in beaten-down crude, writes Tim Puko at The Wall Street Journal. Comparing it to the stock of two years ago makes for stellar reading as it rose by 150 million barrels.
Oil settled down more than a fifth from its June highs in NY, meaning it is now in a bear market by the most common definition of the term.
U.S. West Texas Intermediate (WTI) crude CLc1 was up 67 cents at $40.73 a barrel, having reached a session high of $40.91.
Analysts said a weaker US dollar, which has shed 2.5 percent in value against a basket of other leading currencies.DXY since July highs, was lending oil markets some support by making fuel imports cheaper for countries using other currencies, potentially stoking demand.
Brent for October settlement was 27 cents higher at $42.07 a barrel on the London-based ICE Futures Europe exchange. Gasoline production slipped last week, averaging 10.0 million barrels a day. “With spot prices getting under $40 yesterday, we are not surprised to see spot prices rebounding on the gasoline draw”.
The American Petroleum Institute (API), an industry trade group, said yesterday that USA crude oil inventories fell by 1.3 million barrels in the week ended July 30. “We think in the near term, oil will be under pressure because demand is moderating”.
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Price rises earlier in the week were driven in large part by traders cashing in on short positions that profited from a more than 20 percent price fall in oil between June and early August, they added.
