Investing.com -- Crude futures retreated from two-week highs on Wednesday, amid heavy profit taking, but still ended the second quarter with one of its strongest three-month rallies in seven years, amid a host of global supply disruptions in recent weeks.
On the New York Mercantile Exchange, WTI crude for August delivery traded between $48.27 and $49.62 a barrel before closing at $48.34, down 1.54 or 3.09% on the session. On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $49.63 and $51.02 a barrel, before settling at $49.66 down $1.66 or 3.23% on the day. Crude futures fell sharply in the final minutes before the close, nearly erasing all of their gains from Wednesday's surge.
For the quarter, both the U.S. and international benchmarks surged approximately 25%, as a series of production slowdowns throughout the world helped provide significant upside pressure for crude futures. While investors continued to express widespread concerns related to the global oversupply, their fears were softened somewhat by Canadian wildfires in May and a string of rogue attacks on oil facilities in Southern Nigeria. In mid-April, investors largely ignored a stalemate at a closely-watched meeting in Doha when Saudi Arabia broke off talks by insisting that Iran take part in a comprehensive pact to freeze production at January levels. At the same time, outages in Iraq and Libya have helped limit OPEC production from hitting fresh record-highs.
Since falling to 13-year lows in mid-February at $26.05, U.S. crude futures have rebounded more than 60%.
Investors continued to digest Wednesday's bullish inventory report when the the Energy Information Administration (EIA) said in its Weekly Petroleum Status said U.S. commercial crude oil inventories decreased by 4.1 million barrels last week for the week ending on June 24. At 526.6 million barrels, U.S. crude oil inventories are still at historically high levels for this time of year. Meanwhile, U.S. crude production fell sharply by 55,000 barrels per day to 8.622 million bpd, suffering its 22nd weekly decline over the last 23 weeks. Last year at this time, domestic production peaked at 9.6 million bpd, its highest level in four decades.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.50% to an intraday high of 96.46, before falling slightly back to 96.19 in U.S. afternoon trading. After plunging nearly 5% over the first three months of the year, the index is on pace to rebound approximately 1.6% over the second quarter.
Dollar denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
Despite the recent upswing, crude futures are still down more than 50% from their level 24 months ago when they peaked at $115 a barrel.