Investing.com -- Crude futures rose sharply on Wednesday, amid dwindling U.S. stockpiles and slowing production which helped ease longstanding concerns of oversupply.
On the New York Mercantile Exchange, WTI crude for July delivery gained 0.98 or 1.66% to $58.95 a barrel, halting a short two-day skid.Texas Long Sweet futures rebounded on Wednesday, one session after plunging nearly 3.75% as record supply levels in Saudi Arabia coupled with a stronger dollar, led to the sell-off.
On the Intercontinental Exchange (ICE), brent crude for July delivery rose 0.97 or 1.52% to 64.99 a barrel. Brent is still down significantly from its peak on May 6 when it reached a five-month high at 70.36. The spread between the U.S. and international benchmarks of crude stood at 6.04, down one cent from Tuesday's level of 6.05.
WTI crude prices neared $59 a barrel in U.S. morning trade before the release of the Energy Information Administration's weekly crude inventory report at 10:30 EST. U.S. commercial crude stockpiles fell by 2.7 million barrels for the week ending May 15, above estimates of a 2.1 million draw. Crude stockpiles nationwide are now at 482.2 million barrels, according to the EIA -- its highest level at this time of year in at least 80 years.
After steadily increasingly on a weekly basis for the first three and a half months of the year, crude inventories have now declined for a period of three consecutive weeks. A week earlier, crude stockpiles dipped by 2.2 million barrels, amid increased refinery demand as the summer driving season nears. The trend continued last week, as refinery utilization spiked by 1.2%.
At the Cushing Oil Hub in Oklahoma, the nation's largest storage facility of crude, storage capacity remains near 80%, according to Genscape, Inc. A month earlier, the figure hovered around 90%, exacerbating concerns that the U.S. could reach full storage capacity.
Weekly U.S. crude output, meanwhile, declined to 9.262 million barrels per day from 9.374 million bpd, as production in Alaska declined. In recent weeks, the slowdown in production has been concentrated in top shale fields such as the Bakken shale formation in North Dakota and the Permian basin in West Texas.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, rose 0.14% to 95.51. The dollar remained relatively unchanged after the Federal Reserve provided further indications that a June interest rate hike is unlikely, when it released the minutes of its April meeting in U.S. afternoon trading.
Elsewhere, United Nations head Ban Ki-Moon scheduled talks on May 28 in Geneva between the Yemeni government, Houthi leaders and other involved parties in the conflict in Yemen, in an effort to end weeks of fighting in the Persian Gulf state. Yemen has been bombarded by air strikes from Saudi Arabia since early-March. Energy traders are sensitive to any geopolitical unrest involving Saudi Arabia, the world's largest exporter of crude.