Investing.com – Crude prices rose about 1% Wednesday after mixed data on U.S. fuels helped oil longs recoup losses from a day ago and reset trajectory in a market showing little regard thus far for deep production cuts announced by Saudi Arabia.
New York-traded West Texas Intermediate, or , crude settled up 79 cents, or 1.1%, at $72.53 per barrel, offsetting Tuesday’s decline of 0.6%.
London-traded crude officially finished the day at $76.95, up 66 cents or 0.9%.
WTI and Brent rallied as much as 2% earlier in the session, with some traders attributing the run-up to belated enthusiasm over Saudi Arabia’s declaration after Sunday’s meeting of the OPEC+ alliance that it will cut an additional one million barrels per day in July to effectively take 2.5M barrels off its regular daily output.
Others dismissed that speculation, tying the rally more to weekly supply-demand data from the U.S. Energy Information Administration, or EIA that suggested stronger on the ground movement for gasoline and diesel.
“It is not the first time we have seen this sort of price action only for the rally to run out of steam,” said Fawad Razaqzada, analyst at FX Stone.
“The market needs some assurance that the other cartel members won’t be taking advantage of Saudi and will be complying fully,” Razaqzada said, referring to OPEC+. “Russia could be the main culprit, as Moscow needs to sell as much oil as it can to finance its ongoing war in Ukraine.”
stockpiles fell last week bucking expectations for a build but inventories of fuel jumped way above forecasts, the EIA said as it issued a mixed weekly report on supply-demand amid the start of peak summer travel.
The slid by 0.451 million barrels during the week to June 2, the EIA said in its Weekly Petroleum Status Report. Analysts tracked by Investing.com had expected the EIA to cite a crude build of 1.022 million barrels for last week, after the 4.488M barrel rise reported during the week to May 26.
The weekly draw in crude came despite a 1.9 million barrel release from the Strategic Petroleum Reserve, or SPR. The Biden administration has been tapping the SPR since late 2021 to prevent extraordinary tightness in U.S. crude supply that could lead to spikes in pump prices of fuel.
On the front, however, the EIA reported a build of 2.746M. Analysts expected a build of 0.880M barrels. In the previous week, the agency reported a 0.207M-barrel decline for gasoline, which is the No.1 U.S. fuel product.
With , the EIA said there was a surge of 5.075M barrels. Analysts had forecast a build of 1.328M barrels instead for distillates, versus the prior week’s gain of 0.985M. Distillates are refined into , diesel for trucks, buses, trains and ships, and fuel for jets.
While the builds in gasoline and distillate stocks opposed the bets made by oil bulls, the overall picture for summer fuel demand was positive based on EIA data for actual consumption in the marketplace last week.
Finished motor gasoline products delivered to the marketplace totaled 9.218M barrels per day last week versus the prior week’s 9.098M per day.
For distillates, this reading was at 3.814M barrels daily, up from the previous week’s 3,646M daily.
The EIA’s latest weekly report is particularly important for the oil trade as it tells of demand in the run-up to May 29 Memorial Day holiday, which unofficially flags off peak U.S. summer travel.
Read the full article here