The U.S. Energy Information Administration (EIA) said crude stocks fell 5.2 million barrels in the week ended Oct. 14. Analysts polled by Reuters had expected the EIA to report a crude build of 2.7 million barrels. [EIA/S]
U.S. West Texas Intermediate (WTI) crude’s front-month contract rose $1.39, or 2.7 percent, to $51.68 a barrel by 11:26 a.m. EDT (1526 GMT). It hit $51.93 earlier, its highest since July 2015. WTI’s more active second-month hit 5-month highs.
Brent, the international benchmark for crude, was up $1.21, or 2.3 percent, to $52.89 per barrel. It earlier hit$53.14.
It is common for crude stocks to build at this time of year as refineries go into maintenance, turning out less gasoline and other fuel products. Refinery runs have fallen since the start of September, reaching 88 percent of capacity last week.
The EIA data also cited lower crude imports as a factor for the inventory drop. U.S. crude imports slid by 912,000 barrels per day last week to 6.47 million bpd, the lowest since November 2015.
“The report was bullish due to the large drop in crude oil inventories,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Still, a surprisingly large build of 2.5 million barrels in gasoline stocks that contrasted with analysts’ expectations for a 1.3 million-barrel drop meant a less rosy outlook for oil for some.
“So, while the headline number was bullish, we wouldn’t call it extremely bullish given the large gasoline build,” said Tariq Zahir, a trader in timespreads of WTI at Tyche Capital Advisors in New York.
Also supporting oil was evidence of declining production in China and optimism that the Organization of the Petroleum Exporting Countries will secure an output cut at its meeting next month.
Oil prices have risen more than 15 percent over the past three weeks after OPEC announced plans to remove some 700,000 barrels per day of production from a global crude glut of 1.0 million-1.5 million bpd estimated by analysts.
Russian Energy Minister Alexander Novak said on Wednesday he was planning to meet his Saudi Arabia counterpart this weekend to discuss coordination of actions to support the market. OPEC itself meets Nov. 30 to finalize the output cuts.
(Additional reporting by Amanda Cooper in LONDON and Henning Gloystein in SINGAPORE; Editing by Meredith Mazzilli and David Gregorio)