Investing.com -- WTI crude futures soared on Wednesday, as bullish supply data pushed prices to its highest level since Christmas.
On the New York Mercantile Exchange, WTI crude for May delivery surged nearly 6% in U.S. afternoon trading to $56.45 a barrel, before falling back slightly to $56.09 at the close. Texas Light Sweet futures are now on a five-day winning streak after plunging near $50 last week, following record buildup.
On Wednesday morning, crude futures rose sharply after the Energy Information Administration said in its weekly inventory report that crude supply increased by 1.3 million barrels for the week that ended April 10, below expectations for a build of 4.1 million. With last week's increase, supply levels in the U.S. are now at 483.7 million barrels, the most in at least 80 years. By comparison, there were 394.1 million barrels in storage last year at this time roughly 22% fewer than the current total.
Last week, inventories skyrocketed by 10.95 million barrels -- the highest weekly gain in more than a dozen years. The rapid buildup in recent months has exacerbated concerns that the U.S. could reach storage capacity before the start of the summer. As storage levels near capacity, analysts have forecasted that production could slow from near-record totals -- a development which could send prices crashing. Crude futures are down more than 50% from last summer when they exceeded a $110 a barrel.
On Monday, the EIA said it expects U.S. shale field production to decline next month for the first time in four years. The EIA forecasts that production in the Bakken formation in North Dakota will decline by 23,000 barrels to 1.3 million barrels per day, while production at Eagle Ford in South Texas will fall by 33,000 to 1.69 million bpd, dropping overall production from 5.02 million barrels in April to 4.98 million bpd in May.
On the Intercontinental Exchange (ICE), brent crude for June delivery also surged more than 5% to $63.02 in U.S. afternoon trading, amid continued fighting in the Middle East. The spread between the international and U.S. domestic benchmarks stood at $6.93, up from $6.52 on Tuesday.
In Iraq, securities forces said they have yet to seize control of the Baiji Oil Refinery to Isis -- five days after fighters from the Islamic state stormed the nation's largest refinery. On Tuesday, hundreds of Iraqi entered the refinery in Northern Iraq to provide reinforcement.
Elsewhere, at least five vessels carrying food were stuck outside of Yemen as Saudi forces searched them for weapons potentially headed to Shiite-led Houthi rebels. Yemen is strategically located on the Bab el-Mandeb strait, one of the world's largest chokepoints of oil.
Energy traders are sensitive to any risky geopolitical news involving Saudi Arabia.