Oil higher after data shows big U.S. inventory fall

Oil futures were higher Wednesday, boosted by industry data showing a large fall in U.S. crude stockpiles as traders awaited a decision this week by the Organization of the Petroleum Exporting Countries and its allies on whether to further ease production curbs.

West Texas Intermediate crude for August delivery
CL00,
+1.22%

CLQ21,
+1.22%
rose 91 cents, or 1.2%, to $73.89 a barrel on the New York Mercantile Exchange. WTI, the U.S. benchmark, was on track for an 11.4% second-quarter rise and was up nearly 25% for the year to date.

September Brent crude
BRN00,
+1.08%

BRNU21,
+1.08%,
the global benchmark, was up 78 cents, or 1.1%, at $75.06 a barrel on ICE Futures Europe. Brent was up 8.3% for the quarter and 19.6% over the first half, based on most actively traded contracts. August Brent crude
BRNQ21,
+0.91%
was up 61 cents, or 0.8%, at $75.37 a barrel.

The OPEC+ decision remains the main event of the week. A meeting of the body’s Joint Ministerial Monitoring Committee, or JMMC, was postponed by a day to Thursday, news reports said, in a move that means three meetings — OPEC ministers, the JMMC and then OPEC+ ministers — will take place on Thursday.

The JMMC delay was aimed at giving parties more time to reach a compromise, with Russia considering a proposal to hike production, while Saudi Arabia would prefer a more gradual approach, Bloomberg reported.

“We would not overinterpret this as dissent,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.

“It is rather the case that OPEC+ currently has the luxury of being able to control events on the oil market in the medium term, partly because the reaction of countries outside the producers’ alliance has been fairly disappointing,” he said.

In particular the restrained response to rising oil prices by the U.S. shale oil industry, which is now showing economic and financial discipline and following a “sustainable growth” approach rather than the “growth at any cost” principle, has allowed OPEC to serve as the marginal producer, with control over prices, Weinberg said.

Meanwhile, the American Petroleum Institute, an industry trade group, reported Tuesday afternoon that U.S. crude-oil inventories fell by 8.15 million barrels last week, according to a source who cited the data. API also saw gasoline inventories rise by 2.42 million barrels, while distillate supplies were up 428,000 barrels, the source said.

Supplies at Cushing, Oklahoma, the delivery hub for New York Mercantile Exchange oil futures, were seen down 1.32 million barrels.

More closely followed data from the Energy Information Administration is due Wednesday morning. Analysts surveyed by S&P Global Platts look for crude stocks, on average, to fall by 4.7 million barrels, while gasoline supplies are seen down by 700,000 barrels; distillate stocks were expected to rise by 100,000 barrels.

Meanwhile, August gasoline
RB00,
+0.90%

RBQ21,
+0.90%
rose 0.2% to $2.2461 a gallon, while August heating oil
HO00,
+0.64%

HOQ21,
+0.64%
was up 0.4% at $2.1336 a gallon.

August natural-gas futures
NG00,
+3.11%

NGQ21,
+3.11%
jumped another 2.3% to $3.714 per million British thermal units, after closing Tuesday at the highest level for a front-month contract since December 2018, as hot temperatures grip the western U.S.

Advertisement

Leave a Comment