Oil futures settled lower on Wednesday after a weekly U.S. government report revealed an unexpected climb in gasoline supplies and an increase in oil production.
August crude lost 74 cents, or 1.2%, to settle at $60.27 a barrel on the New York Mercantile Exchange following a volatile session in the wake of supply data. August Brent crude on London’s ICE Futures exchange ended at $63.49 a barrel, down 96 cents, or 1.5%.
The U.S. Energy Information Administration on Wednesday reported a drop of 4.9 million barrels in crude supplies for the week ended June 19. Analysts polled by Platts forecast a crude-stock fall of 2.3 million barrels, while the American Petroleum Institute late Tuesday reported a decline of 3.2 million barrels. “It wasn’t too un-surprising to see a large draw to crude stocks given the rise in refining activity and the drop in imports” due to tropical storm Bill last week, said Matt Smith, director of commodity research at Clipper Data. But West Texas Intermediate crude prices showed a negative initial reaction to the supply data. Prices then climbed and seesawed before settling lower. Domestic production edged higher and gasoline inventories unexpectedly increased, “which does not point to a robust driving season,” said Fawad Razaqzada, technical analyst at FOREX.com.
Supplies at the futures delivery hub of Cushing, Okla., fell 1.9 million barrels, EIA data showed. Meanwhile, U.S. oil production, excluding Alaska, rose 76,000 barrels to 9.19 million barrels a day. Total output rose to 9.60 million barrels a day. The output increase suggests that “the fundamentally bearish trend of rising production remains intact, leaving the near-term outlook for U.S. crude-oil prices lower still,” said Tyler Richey, co-editor of The 7:00’s Report. Gasoline supplies climbed by 700,000 barrels, while distillate stockpiles rose 1.8 million barrels last week, EIA data showed. Analysts, based on the Platts survey, expected a decline of 583,000 barrels for gasoline stockpiles and an increase of 592,000 barrels for distillates, which include heating oil.