Oil prices rose about 1 percent on Wednesday, hitting new 2016 highs, as the market focused on large drawdowns in US refined fuel inventories and ignored a surprise build in crude stockpiles.
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US crude inventories climbed to 541.3 million barrels, near the highest since October 1929, according to the Energy Information Administration.
Our ClipperData affirms stronger exports; coinciding with March’s draw on stocks, we saw crude loadings some 8 percent higher than year-ago levels – which in itself was the highest month for imports last year.
Oil futures reversed course late Wednesday to settle narrowly lower as minutes from the U.S. Federal Reserve showed that an interest-rate hike was possible in June.
At about 0330 GMT, US benchmark West Texas Intermediate (WTI) for June delivery fell 72 cents, or 1.49 percent, to $47.47 a barrel.
The rally came on the expectations for lower U.S. crude stockpiles, a new wildfire threat on Canadian oil supplies and intensified worries about crude supply outages in Libya and Nigeria.
Despite the outages and falling USA output as the near-halving of oil prices since mid-2014 curbs investment by shale drillers, Opec production is at its highest in years thanks in part to higher Iranian exports.
Brent for July settlement rose 31 cents, or 0.6%, to $49.28 a barrel on the London-based ICE Futures Europe exchange.
“The main factor weighing on prices is the much appreciated U.S. dollar”, said Commerzbank analyst Carsten Fritsch.
Supply losses in Canada and Nigeria have supported the market.
Hot and dry weather and strong winds were expected to push a massive wildfire near Fort McMurray, Alberta eastward on Wednesday, threatening facilities and work camps in the prized oil sands region.
At Multi Commodity Exchange, crude oil for delivery in June traded Rs 70, or 2.11 per cent lower, at Rs 3,250 per barrel in 8,595 lots. These producers extended their bets that prices would fall to their highest levels in four and a half years.
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Over the near-term, there are also signs that demand could be rising faster than many analysts had expected. “Overall, the strength in products, which is now over 20 million barrels per day, and the seasonality heading into peak driving season should give a bullish bias to today’s data points”, Jarvis said. “This is not sustainable”, said Neil Beveridge, senior analyst at Bernstein, adding that global oil market is unlikely to see a rebalance until prices edge up to at least $60-$70 a barrel.
