Investing.com – Crude futures settled higher on Wednesday, as investors cheered data showing supplies of U.S. crude fell by more-than-expected, fuelling expectations that an uptick in demand during the second-half of the year would reduce some of the surplus supplies.
On the New York Mercantile Exchange crude futures for August delivery rose by 1.6% to settle at $47.12 a barrel, while on London's Intercontinental Exchange, Brent added 1.82% to trade at $49.73 a barrel.
Crude prices settled higher for a second-straight day, after a report from the Energy Information Administration (EIA) showed crude and gasoline stockpiles fell by more than expected last week, pointing to an uptick in demand for crude and oil products.
Inventories of U.S. crude fell by roughly 4.7m barrels in the week ended July 14, confounding expectations of a draw of about only 3.2m barrels. It was third-straight week of falling crude inventories.
Gasoline inventories, one of the products that crude is refined into, fell by roughly 4.5m barrels against expectations of a draw of 655,000 barrels while distillate stockpiles unexpectedly fell by 2.1m barrels, compared to expectations of a rise of 1.2m barrels.
Despite the better-than-expected drawdown, both products’ inventories remain in the upper half of the average range for the time of year, the EIA said.
Earlier this month, the EIA said U.S. production rose to 9.43m barrels per day, its highest since July 2017, adding to the current output glut amid efforts from Opec to rein in excess supply, which has pressured prices over the past three years.
A report on Tuesday, suggesting that Saudi Arabia is considering cutting crude exports by up 1 million barrels a day to offset a rise in output from Libya and Nigera, drew praise from analysts, who suggested that the export cuts signal real intent to curb excess supply.
Saudi Arabia’s reported “efforts to rebalance the rise in Libyan and Nigerian supplies by reducing output by 1 [million barrels] a day is an admirable approach,” said Adrienne Murphy, chief market analyst at AvaTrade. “The cartel would ensure investors that they will do ‘whatever it takes’ to revitalize the market, instead of the ‘just about enough’ approach they took ... when they simply extended supply curbs.”
In May, Opec and non-Opec members agreed to extend production cuts of 1.8m bpd for a period of nine months until March, but allowed Nigeria and Libya to remained exempt from the cuts.