Oil Prices Recover On Encouraging Inventory Data
28 June 2017 - 9:22PM
Dow Jones News
By Stephanie Yang, Neanda Salvaterra and Jenny W. Hsu
Oil prices rose for the fifth day in a row on Wednesday,
bolstered by U.S. data that showed the amount of crude in storage
rose by less than some had expected.
Light, sweet crude for August delivery rose 50 cents, or 1.1%,
to $44.74 a barrel on the New York Mercantile Exchange, the highest
close since June 16. Brent, the global benchmark, gained 66 cents,
or 1.4%, to $47.31 a barrel.
Data from the U.S. Energy Information Administration showed that
crude inventories rose by 100,000 barrels in the week ended June
23. While storage levels edged higher, the official number fell
short of projections by the industry group American Petroleum
Institute for stockpiles to increase by 800,000 barrels.
Analysts and traders surveyed by The Wall Street Journal
expected on average that crude stockpiles would fall by 2.4 million
barrels. However, API's Tuesday estimates had led some traders to
take a more bearish stance.
"Expectations got greatly reduced on the API report," said John
Kilduff, founding partner at Again Capital. "Even though there was
still a slight build, it sort of saved the day."
Meanwhile, oil products in storage fell by more than analysts
expected, with gasoline stockpiles declining by 900,000 barrels and
distillate stockpiles dropping by 200,000 barrels last week. Market
participants noted that the latest changes to storage levels may
have been influenced by disruptions from Tropical Storm Cindy.
Wednesday's move continued a rebound from when prices fell into
bear market territory last week, helped by bargain hunters and
reports of cyberattacks on global businesses impacting shipping
giant A.P. Moeller-Maersk A/S and Russian oil producer PAO
Rosneft.
Oil prices are "coming back from the brink," said Mark Waggoner,
president of Excel Futures. "It was right on the edge...That tells
us we're back in the trading range."
Oil recently returned to a bear market even as the Organization
of the Petroleum Exporting Countries and a handful of nations
outside the cartel have cut global supply by about 2% with the aim
of easing a supply glut. But despite efforts by the major oil
producers, global stocks remain elevated and investors are growing
concerned that the cuts have proven ineffective.
"The market is somehow getting the fact that the rebalancing is
not occurring," said Olivier Jakob from the Switzerland-based
consultancy Petromatrix. "It's difficult to have a strong rebound
when you continue to have builds in the U.S."
Gasoline futures rose 1.6% to $1.4833 a gallon and diesel
futures rose 1.4% to $1.4330 a gallon.
Write to Stephanie Yang at stephanie.yang@wsj.com, Neanda
Salvaterra at neanda.salvaterra@wsj.com and Jenny W. Hsu at
jenny.hsu@wsj.com
(END) Dow Jones Newswires
June 28, 2017 16:07 ET (20:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.