Investing.com -- Crude futures edged up modestly on Thursday, paring earlier losses in the session, amid sharper than expected declines in weekly stockpiles.
On the New York Mercantile Exchange, WTI crude for July delivery gained 0.25 or 0.43% to 57.76 a barrel. Earlier, WTI crude plunged to a session-low of $56.53 as traders anticipated a mild drop in U.S. stockpiles over the last week. However, Texas Long Sweet futures rebounded in U.S. morning trading to move above $57 a barrel as concerns of oversupply eased.
In its weekly Petroleum Status Report released on Thursday, the Energy Information Administration (EIA) said that U.S. crude inventories decreased by 2.8 million barrels for the week that ended May 22, marking the fourth consecutive week of weekly declines. Analysts expected crude stockpiles to decline marginally by 0.9 million barrels on the week.
At the Cushing Oil Hub in Oklahoma, inventories on the week fell by 433,000 to 60 million barrels as refinery demand ticked upward. A draw at the nation’s largest storage facility for crude is a bullish sign for WTI, amid a glut of oversupply on the market. By comparison, last year at this time Cushing had stored only 21.7 million barrels -- a decline of more than 175%. As stockpiles at Cushing neared 90% of its total limit earlier this spring, concerns mounted that the U.S. could reach full storage capacity by the start of the summer.
The combination of slowing production with a surge in refinery demand ahead of the summer driving season has enabled inventory levels to stabilize. Last week, U.S. refinery inputs averaged 16.5 million bpd – an increase of approximately 233,000 bpd from the previous week. Refineries operated at 93.6% of their capacity last week, up from 92.4 a week earlier.
On the Intercontinental Exchange (ICE), brent crude for July delivery gained 0.53 or 0.85% to 62.59 a barrel to halt a four-day slump. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude rose to 4.83, above Wednesday’s level of 4.54.
A critical OPEC meeting next week has weighed on brent, which is down considerably since exceeding $70 a barrel earlier this month. OPEC officials are expected to keep production levels unchanged at the meeting in Vienna. As of March, OPEC produced more than 31 million bpd or roughly one-third of the world’s total output. Energy officials in Saudi Arabia have resisted calls to curb production in recent months in an effort to slow U.S. shale output.
Last week, U.S. crude production increased to 9.566 million barrels per day up from a total of 9.262 for the week ending May 15. There is growing concern that U.S. shale producers might ramp up output if WTI future prices stabilize at their current level.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.16 on Thursday to 97.19.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.