(Bloomberg) -- Oil erased most of its losses during the session after a larger-than-expected drop in crude stockpiles.
Futures closed down 0.2 percent in New York on Wednesday after earlier shedding as much as 2.3 percent. Surplus supplies held in U.S. tanks fell more than any of the 11 analysts in a Bloomberg survey anticipated. Even as the nationwide tally contracted, inventories at a key pipeline hub in Oklahoma swelled the most since late 2016, exacerbating concerns that supplies may overwhelm demand amid simmering trade tensions between the U.S. and China.
“The market's clearly tightening, which is supportive of oil prices,” said Cavan Yie, portfolio manager at Manulife Asset Management Ltd. in Toronto.
U.S. crude exports rose to a record and imports ticked lower, contributing to overall crude withdrawal of 4.62 million barrels from storage last week, according to the Energy Information Administration's weekly report released on Wednesday. As OPEC works to trim worldwide supplies, investors continue to zero in on U.S. inventories.
The nationwide storage decline “was pretty constructive, but China-U.S. tensions and trade negotiations are weighing on the market,” said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets. “The uncertainty and potential impacts to global demand are causing some jitters.”
West Texas Intermediate for May delivery fell 14 cents to settle at $63.37 a barrel on the New York Mercantile Exchange. Total volume traded was about 14 percent above the 100-day average.
The Cushing Factor
Brent for June settlement slid 10 cents to end the session at $68.02 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $4.69 premium to June WTI.
The profitability of making diesel dropped as much as 5.9 percent to $19.09 a barrel during the session.
U.S. gasoline inventories fell for a fifth week, while distillate stockpiles rose, according to the government report. Supplies at the sprawling pipeline and storage complex in Cushing, Oklahoma, jumped by 3.67 million barrels to a level last seen in early February. On top of that, output from U.S. oil wells climbed for a sixth straight week to 10.46 million barrels a day.
Oil-market news:
- Gasoline futures rose 0.1 percent to settle at $1.9768 a gallon.
- Kazakhstan's cash-strapped state oil company generated another $1 billion in prepayments by extending a crude-supply contract with Vitol Group.
- In a deeply detailed account spelled out in U.S. courts, Venezuela alleges it was the victim of a decade-long bid rigging scheme costing it billions of dollars.
To contact the reporter on this story: Jessica Summers in New York at jsummers24@bloomberg.net.
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Joe Carroll, Steven Frank
©2018 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
