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NYMEX Crude $ 46.79 UP $.2100
NY Harbor ULSD $1.4892 UP $.0279
NYMEX Gasoline $1.4505 UP $.0279

Note: Market is up over 23 cents since August 1st

NEWS
Oil futures finished higher Wednesday, getting a lift from bigger-than-expected declines in U.S. supplies of crude and gasoline as well as a retreat in the dollar following minutes from the Federal Reserve’s July meeting.

Shortly before oil prices finished a choppy session on Nymex, minutes from the July Fed meeting showed officials at the central bank were split over whether an interest rate hike would be needed soon. That damped expectations for an interest rate hike before the end of the year, and put pressure on the dollar offering support for dollar-denominated commodities such as oil. But data showing a sizable weekly increase in U.S. oil production and comments from Iran voicing its unwillingness to participate in a potential deal among major producers to freeze output limited the gains for oil prices.

September West Texas Intermediate crude climbed by 21 cents, or 0.5%, to settle at $46.79 a barrel on the New York Mercantile Exchange. Prices had seesawed between losses and gains during the session. October Brent crude on London’s ICE Futures exchange added 62 cents, or 1.3%, to $49.89 a barrel. “There were three key influences on the oil market today: the EIA report, the FOMC Minutes, and September options expiration, which is a recipe for a very volatile and choppy session,” said Tyler Richey, co-editor of The 7:00’s Report. WTI rallied into the close mostly thanks to the dollar weakness that followed the Federal Reserve’s Open Market Committee minutes “and the roughly 15% peak to trough rally that began back on August 3rd is still very well intact in the oil market,” he said.

Supply declines
The U.S. Energy Information Administration early Wednesday reported that domestic crude supplies declined by 2.5 million barrels in the week ended Aug. 12. That was above to the 200,000-barrel fall expected by analysts polled by S&P Global Platts and the 1 million-barrel draw down reported by the American Petroleum Institute late Tuesday.

The biggest news in the EIA report was the size of the decline in crude-oil stockpiles, Richey told Market Watch. “The details, however, were a bit shocking.” The report also showed that total domestic production rose by 152,000 barrels a day to 8.597 million barrels a day, with output in the lower 48 states climbing 100,000 barrels a day to 8.120 million barrels a day. The increase for output in the 48 states appears to be the “largest increase in domestic production ex-Alaska since May 22nd of last year,” according to Richey. The rolling four-week moving average was a decline of 13,500 barrels a day coming into this week but with the new data, that’s turned to a rise of 18,750 barrels a day—positive for the first time since January, said Richey. That suggests “the trend may have just reversed from production declines to production increases in the U.S.” “Such a development would be decidedly bearish fundamentally considering [the Organization of the Petroleum Exporting Countries] is still pumping ‘full throttle’ and the U.S. is the only ‘swing producer’ in the world given the current OPEC policy dynamic,” Richey said.

Gasoline supplies also declined by 2.7 million barrels, while distillate stockpiles rose 1.9 million barrels last week, according to the EIA. Analysts polled by Platts were looking for a drop of 1.8 million for gasoline and a decline of 500,000 barrels for distillates, which include heating oil.