Crude oil stockpiles fell by more than expected, according to the Energy Information Administration.
Inventory fell 7.2 million barrels for the week ending June 27 compared to a build of 1.4 million barrels the previous week. Analysts followed by Investing.com had forecast a draw of 710,000 barrels.
The government’s data confirmed industry data from the American Petroleum Institute released Tuesday that estimated a greater than expected draw of 8.1 million barrels.
Investing.com analyst Barani Krishnan said the draw-down in stored crude might be bigger than expected because of an increase in refiner buying and other activity ahead of the July 4th holiday, when Americans routinely take to the road.
“We’ll need to see at least another week or two of numbers to ascertain if there’s really such a big turnaround in demand when reopening stats spin a different narrative,” Krishnan said. “For now, total products supplied over the last four-week period average 16.2 million barrels a day, down by 20% from the same period last year. On paper, that looks fundamentally good for the bulls.”
The amount of oil stored at Cushing, Oklahoma, to settle WTI delivery fell a larger than expected 263,000 barrels, but that was less than the draw of 991,000 barrels the previous week. Gasoline inventory rose 1.2 million barrels, compared to a draw of 1.7 million barrels a week ago. Distillate inventory fell 593,000 barrels, compared to a build of nearly 250,000 barrels previously.
“To take away some of the powder from this big blast of a draw, you have the Strategic Petroleum Reserve adding another 1.7 million barrels last week while Cushing had a puny draw of just 200,000 barrels,” Krishnan noted. “And U.S. crude production is no longer falling, standing steady at the previous week’s 11 million barrels per day. By all indications, production could grow, rather than fall, from here as rig drops have virtually frozen too.”
Oil prices rose in early morning trading. Crude oil WTI futures jumped 1% after the data were released at 10:30 AM ET, to $39.59, and international benchmark Brent was up 0.8%, near $41.60 a barrel.