Investing.com -- Crude futures were mixed on Wednesday, paring some gains from earlier in the session as investors digested the sharpest one-week production decline in U.S. production in nearly a year and a stronger than expected build in domestic crude stockpiles last week.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $43.23 and $44.87 a barrel, before settling at $43.84, up 0.19 or 0.44% on the session. After hitting fresh 2016-yearly highs late last week, the front month contract for U.S. crude has fallen by approximately 5% in spite of the modest gains. On the Intercontinental Exchange (ICE), brent crude for July delivery wavered between $44.20 and $46.02 a barrel, before closing at $44.70, down 0.27 or 0.60% on the session. North Sea brent futures have crashed more than $4 dollars a barrel since reaching 5-month highs last week.
On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude inventories increased by 2.8 million barrels for the week ending on April 29 in comparison with the previous week. At 543.4 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. While energy analysts expected a slight gain of 750,000 on the week, they adjusted expectations after a forecast of 1.265 million barrel build on Tuesday afternoon by the American Petroleum Institute. The unexpected build came from a surprising increase in gasoline stocks, which surged by 0.5 million barrels on the week. Inventories can be inflated at this time of year as refineries complete preparations for the summer driving season.
More critically, U.S. production decreased by 113,000 barrels per day last week suffering its strongest weekly decline since last July. Domestic output in the U.S. has now fallen in 11 consecutive weeks, dropping to its lowest level since September, 2014. U.S. production continues to wane as higher-cost shale producers are forced offline as crude prices linger near multi-year lows.
Elsewhere, investors reacted to further indications of weakness in the sector after Reuters reported bankruptcies among energy companies reached 59 earlier this week mirroring the downturn in the telecom industry in the early 2000s. It came after Midstates Petroleum and Ultra Petroleum both filed for bankruptcy protection, underscoring the effects of persistently weaker oils prices.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.30% to an intraday-high of 93.36. The index is still down approximately 7% since the start of December. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.