(Updates with Biden comments, WTI settlement)
By Barani Krishnan
Investing.com - Oil prices rose on Wednesday, helping market longs extend their recovery from a dismal week. But gains were limited somewhat by disappointing drawdowns in U.S. stockpiles.
The market was also under pressure briefly after President Joe Biden pushed the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to boost production faster than the current pace of 400,000 barrels per month planned by the 23-nation group.
“We've told OPEC that the output cuts implemented during the pandemic should be overturned,” Biden told a White House media briefing.
Analysts, however, said they weren’t sure how much success the administration would have in pressuring OPEC+, especially with crude prices having declined about 10% or more from this year’s highs amid waning summer demand for oil and a renewed spike in Covid cases.
“The belief that higher prices are harming the recovery and the current pace isn't sufficient is behind the push,” Craig Erlam, analyst at OANDA, said, referring to the maneuver by Washington.
Erlam noted that OPEC+ was no stranger to the White House trying to interfere in its decision making process, with former president Donald Trump being a constant critic of the group during his term.
“It's clear that pressure is going to ramp up. How that will go down in the group is another thing,” Erlam said. “Some will be more than happy to increase production faster while others may be more reluctant after a prolonged period of very low prices.”
New York-traded U.S. West Texas Intermediate crude, the benchmark for U.S. oil, settled up 96 cents, or 1.4%, at $69.25 per barrel. WTI lost 7.7% last week, its sharpest weekly loss since October 2020.
London-traded Brent, the global benchmark for oil, rose 85 cents, or 1.2%, to $71.48 per barrel by 2:50 PM ET (18:50 GMT). Brent lost 7.4% last week.
Weekly consumption in U.S. crude oil and gasoline was less than expected during the week ended July 6, data from the Energy Information Administration showed, as demand slid in the twilight stretch of summer and amid a renewed spike in coronavirus infections.
U.S. crude inventories fell by 448,000 barrels in the week to August 6, the EIA said in its Weekly Petroleum Status Report. Analysts tracked by Investing.com had expected a drawdown of 750,000 barrels instead.
The EIA reported a smaller-than-expected crude draw as U.S. imports declined by 36,000 barrels per day from the previous week. But exports of U.S crude spiked by almost 760,000 bpd to 2.66 million. That suggested
Production of U.S. crude, on the other hand, rose by 100,000 bpd to 11.3 million.
Gasoline stockpiles also fell less than expected, sliding by 1.4 million barrels against a forecast 2 million, the EIA data showed.
Distillates, which include diesel and heating oil, had the best numbers of the lot, drawing down by almost 1.8 million versus an expected 500,000 barrels.