×

Oil rises 1%, settling at $45.49, after bigger-than-expected drop in US crude stockpiles

  • Crude inventories fell by 7.6 million barrels in the last week, compared with analysts' expectations for an decrease of 2.9 million barrels.
  • U.S. oil production ticked up by 59,000 barrels a day to nearly 9.4 million barrels a day.
  • OPEC said its oil output rose by 393,000 barrels per day in June, led by a rebound in Nigeria and Libya.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil price gains eased on Wednesday after government data showed U.S. crude stocks plunged more than expected last week as imports declined and drillers continued to pump more.

Crude inventories fell by 7.6 million barrels in the last week, compared with analysts' expectations for an decrease of 2.9 million barrels.

U.S. crude ended Wednesday's session up 45 cents, or 1 percent, at $45.49. Brent crude, the global benchmark, was up 22 cents at $47.74 a barrel by 2:38 p.m. ET (1838 GMT).

Gasoline stocks fell by 1.6 million barrels, compared with analysts' expectations in a Reuters poll for a 1.1 million barrels gain. Distillate stockpiles, which include diesel and heating oil, rose by 3.1 million barrels, versus expectations for a 1.1 million barrels increase, the EIA data showed.

U.S. oil production ticked up by 59,000 barrels a day to nearly 9.4 million barrels a day.

Analysts told CNBC the rise in U.S. production, pared with an earlier report that OPEC's output jumped in June, weighed on markets.

While the headline figures were bullish, the guts of the report were less impressive, said John Kilduff, founding partner at energy hedge fund Again Capital. Gasoline demand remains mediocre as refiners continue to crank out more fuel, he told CNBC.

"Part of the drawdown [in gasoline] was seasonal. That's not going to last much longer," he said, referring to the bump in demand during the summer driving season. "It's not enough to move the needle."

Andy Lipow, president at Lipow Oil Associates, said he expects the trend of significant crude oil and gasoline to continue because refiners are making good margins and want to run their facilities at high capacity.

A supply glut has stuck around for three years, despite an OPEC-led output cut in 2017, keeping oil at less than half its price of mid-2014.

The supply cut led by the Organization of the Petroleum Exporting Countries has lent prices some support, but in recent weeks rising output from Libya and Nigeria — OPEC members exempt from the deal — has pushed supply higher.

In its monthly report, OPEC said its oil output rose by 393,000 bpd in June to 32.611 million bpd led by a rebound in Nigeria and Libya, plus extra barrels from Saudi Arabia and Iraq.

"We remain very optimistic ... (about) helping the market to rebalance itself," OPEC Secretary-General Mohammad Barkindo said at an industry conference in Istanbul.

A Saudi industry source said on Wednesday that Riyadh planned to reduce shipments in August by more than 600,000 bpd, taking exports for that month to their lowest this year.

OPEC forecast the world will need 32.20 million bpd of crude from its members next year, down 60,000 bpd from this year.

Supporting prices earlier in the session, the EIA said on Tuesday it expected U.S. crude oil production to rise by less than previously forecast next year due to a lower price outlook.

The lower 2018 forecast of 9.9 million barrels per day will ease concerns that the OPEC-led supply cut will lead to a flood of competing U.S. shale supplies, swamping the OPEC effort.

Still, output of 9.9 million bpd would be a record for U.S. production.

— CNBC's Tom DiChristopher contributed to this report.