Crude oil prices were mixed on Wednesday, with U.S. oil ending at a new 6 month low, despite government data showing a further decline in crude oil stockpiles and a unexpected steep drop in gasoline inventories.
The crude complex had a modest rebound in mid-morning trading, as the data showed a pick up in demand in the United States and underlying geopolitical concerns were supportive.
The U.S. Energy Information Administration said U.S. crude stocks fell 1.8 million barrels, a smaller decline than reported by the API industry group on Tuesday but enough to sustain a rebound in tumbling prices. Gasoline stocks fell 4.4 million barrels, suggesting stronger demand.
"The drawdowns in gasoline and distillate fuels are impressive, and the further drawdown in crude oil inventories should combine to support the complex," said John Kilduff, a partner at Again Capital LLC in New York.
Brent crude was up 30 cents near $105 a barrel, after settling on Tuesday at its lowest since Nov. 7. U.S. crude for September delivery fell by 46 cents to settle at $96.92 a barrel, its lowest close since February 3.
Crude inventories in the United States fell by 5.5 million barrels to 363.9 million barrels in the week to Aug. 1, data from industry group American Petroleum Institute showed on Tuesday. Analysts polled by Reuters had expected a decrease of 1.7 million barrels.
Oil prices have fallen more than $10 a barrel over the past six weeks. Global supply has been running ahead of demand, creating a glut in the Atlantic Basin and Asia. Traders have become increasingly nervous about weak seasonal demand and poor refinery margins in a global market that is well supplied with high quality, light crude oil.
But demand in the United States continues to be strong. The drop in U.S. inventories came after upbeat U.S. economic data this week that included a spike in service-sector activity to a nine-year high and a surprisingly large increase in factory orders, possible signs of better oil demand to come.
--By Reuters, with CNBC. For more information on commodities prices, please click here.