U.S. crude production edges down in latest week
Oil futures rallied Wednesday to settle at their highest level since November as weekly data revealed a surprise decline in U.S. crude stockpiles and a bigger-than-expected drop in gasoline inventories.
April West Texas Intermediate crude CLJ9, +0.03% rose $1.39, or 2.4%, to end at $58.26 a barrel on the New York Mercantile Exchange, near the session’s high of $58.44. Prices front-month contract haven’t traded or settled at levels this high since mid-November, according to FactSet data.
May Brent crude LCOK9, +0.04% gained 88 cents, or 1.3%, to $67.55 a barrel on ICE Futures Europe, the highest finish for the international benchmark in about four months.
The Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 3.9 million barrels for the week ended March 8. That ran counter to expectations for a climb of 3.3 million barrels expected by analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday had reported a 2.6 million barrel decline.
“Stymied net imports and refinery runs clambering above the 16 million barrel-per-day mark has been enough to yield a second draw to crude inventories in three weeks,” said Matt Smith, director of commodity research at ClipperData.
The EIA also reported that total domestic crude production inched down from record territory, down 100,000 barrels to 12 million barrels a day.
“Gasoline inventories drew strongly, now down more than 12 million barrels—or 5%—in four weeks, while distillate inventories ticked higher as implied demand slipped last week,” said Smith.
Supplies of gasoline dropped by 4.6 million barrels, while distillates edged up by 400,000 barrels last week, according to the EIA. The S&P Global Platts survey had shown expectations for supply declines of 3.5 million barrels for gasoline and 2.5 million barrels for distillates.
On Nymex, April gasoline RBJ9, +0.61% added 2.3% to $1.857 a gallon, with front-month prices logging the highest finish since October. April heating oil HOJ9, -0.17% rose 0.3% to $1.992 a gallon.
April natural gas NGJ19, +0.32% ended at $2.82 per million British thermal units, up 1.3%. The EIA is expected to report on Thursday a hefty decline of 208 billion cubic feet in last week’s natural-gas inventories, according to a survey of analysts from S&P Global Platts.
Overall, WTI oil “has collected tailwinds from a number of sources including a new EIA estimate of slowing U.S. production growth, and lower OPEC supply amid production cuts, U.S. sanctions and the ongoing blackout in Venezuela,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
On Tuesday, the EIA trimmed its forecasts for U.S. crude production for this year and next and lifted its 2019 forecasts for U.S. and global benchmark oil prices, according to its Short-term Energy Outlook report.
That report combined with U.S. sanctions on the oil industries in Iran and Venezuela, both members of the Organization of the Petroleum Exporting Countries, fostering a bullish environment for crude.
There was a brief delay to some energy futures price settlements on Nymex Tuesday, with Matt Stroud, a CME Group spokesman, citing “a technical issue.”
Looking ahead, monthly oil reports are due out from OPEC Thursday and the IEA on Friday. An annual report from the IEA released Monday said the U.S. was expected to lead the world’s growth in oil output over the next five years.