Oil futures settled higher on Wednesday, with the U.S. benchmark at a high for the year, after a government report showed that crude supplies fell a sixth straight week. But prices ended off the session’s best level as data showed U.S. oil production edged higher. Crude’s advance also came as the Organization of the Petroleum Exporting Countries said it sees no further rise in demand for its oil this year, but it expects the current oversupply to ease. Traders also considered the impact of Islamic State’s assaults on Libya’s largest oil terminal.
July crude climbed $1.29, or 2.1%, to settle at $61.43 a barrel on the New York Mercantile Exchange. Based on the most-active contracts, prices settled at their highest since early December. July Brent crude on London’s ICE Futures exchange rose 82 cents, or 1.3%, to $65.70 a barrel.
The U.S. Energy Information Administration early Wednesday reported a drop of 6.8 million barrels in crude supplies for the week ended June 5. Analysts polled by Platts forecast a crude-stock fall of 1.6 million barrels, while the American Petroleum Institute late Tuesday reported a decline of 6.7 million barrels. Crude inventories dropped as “refining jumped higher by 1.4% on the prior week,” said Matt Smith, director of commodity research at ClipperData. But domestic oil production “ticked higher once again,” he said. The EIA pegged total U.S. production at 9.61 million barrels a day, up 24,000 barrels from a week earlier. Meanwhile, gasoline supplies fell 2.9 million barrels, while distillate stockpiles rose 900,000 barrels last week, according to the EIA. Analysts polled by Platts were looking for a fall of 500,000 for gasoline supplies and an increase of 1.2 million barrels for distillates, which include heating oil. “Total product demand continues to be strong, up over 5% on the four-week average, with gasoline demand up 3.8% over this time frame as summer-driving season kicks into full swing,” said Smith.