U.S. West Texas Intermediate and international benchmark Brent crude oil futures moved higher on Wednesday, boosted by a U.S. government report that showed U.S. refineries processed record amounts of crude in the latest week. This depleted weekly inventories, which was bullish news. However, gains were limited by a surprise jump in gasoline stockpiles.
September WTI crude oil futures closed at $49.56, up $0.39 or +0.79%. October Brent crude oil settled at $52.70, up $0.56 or +1.07%.
According to the U.S. Energy Information Administration (EIA), crude inventories fell by 6.5 million barrels the week-ending August 4. This was steeper than the expected decrease of 2.7 million barrels.
The data also showed refiners processed nearly 17.6 million barrels of crude, surpassing a record set in May and the most for any week since the U.S. Department of Energy started keeping data in 1982.
Traders said the drop in crude inventories was primarily due to a decline in imports and another rise in refinery utilization.
Traders also expressed some concerns about the gasoline inventories number. They noted that demand for both gasoline and distillate fuels remains strong because it is driving season. However, we are drawing closer to the end of summer driving season.
According to the EIA, gasoline stocks rose by 3.4 million barrels. A Reuters poll of analysts called for a drop of 1.5 million barrels. Gasoline futures tumbled about 1 percent on the news.
Forecast
Oil prices are trading higher in Asia early Thursday, helping to underpin U.S. futures. This may be an early indication that Wednesday’s EIA report will continue to be supportive for prices today.
The upside has been limited, however, and this may be a sign that investors are still concerned about gasoline inventories and the rising output in Libya and Nigeria.
It’s been seven days since WTI crude traded $50.43 and the market may be getting tired. Hedge funds are long, but they are going to have to decide sooner or later to buy strength and make an attempt to take out the top and continue the rally, or play for a pullback into the support zone at $47.92 to $47.32.
Based on the recent price action, trader reaction to $48.52 is likely to tell us whether the bulls or the bears are in control.
This article was originally posted on FX Empire