Oil Trades Near Two-Week High After U.S. Inventories Plunge

Oil traded near the highest closing level in two weeks after U.S. crude inventories declined more than forecast.

Futures in New York were little changed after capping a five-day run of gains on Wednesday. Nationwide stockpiles declined 5.84 million barrels last week, the Energy Information Administration reported Wednesday, the biggest drop in four weeks and more than double what was expected in a Bloomberg survey of analysts. Refiners on the Gulf Coast operated at close to their maximum capacity.

“Once again, the weekly release of U.S. official data left its mark on the oil market,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich. “Oil prices gained as crude oil inventories dropped more than expected on the back of seasonally strong refinery demand and lower imports.”

Oil has recovered since sinking to the lowest in almost two months in mid-August amid a pullback in crude inventories in the U.S. Prices are also being supported by the onset of renewed American sanctions against Iran’s oil sales and as a recent slide in the dollar heightens the appeal of commodities priced in the U.S. currency.

West Texas Intermediate crude for October delivery traded 15 cents lower at $67.71 a barrel on the New York Mercantile Exchange as of 11:09 a.m. London time. Total volume traded was about 35 percent below the 100-day average.

The October contract added $2.02 to settle at $67.86 on Wednesday, the highest closing price for the front-month futures since Aug. 7. Front-month futures on Wednesday also posted their longest streak of gains since April 13.

Brent for October settlement traded at $74.41 a barrel on the London-based ICE Futures Europe exchange, down 37 cents. Prices climbed $2.15 to $74.78 on Wednesday, the highest level in three weeks. The global benchmark crude traded at a $6.67 premium to WTI.

American Stockpiles

In the U.S., the crude stockpile decline last week was more than a 2-million barrel drop forecast in the Bloomberg survey. EIA data also showed gasoline and distillate stockpiles increased, while supplies at the Cushing, Oklahoma, storage hub rose for a second straight week.

See also: Iran Says U.S. Use of Strategic Oil Stocks Will Only Boost Price

The dollar is on course for its first gain in six days as investors await a meeting of global central bankers, after the Federal Reserve signaled no change to its pace of monetary policy tightening. It lost more than 1.5 percent in the previous five sessions.

Other oil-market news:

Saudi Arabia said it remains committed to an initial public offering of Saudi Arabian Oil Co., or Aramco. The company said to be focusing on buying a strategic stake in a chemical giant and putting work on its IPO on hold. Russia’s crude supplies to China through the Eastern Siberia Pacific Ocean pipeline and through Kazakhstan totaled 3.397 million tons last month, according to emailed data from Russian Energy Ministry’s CDU-TEK statistical unit.