Oil prices settled to their lowest level in about a month
Wednesday after data showed that U.S. crude stockpiles
unexpectedly climbed for the first time in nine weeks.
July West Texas Intermediate crude
fell $2.47, or 5.1%, to settle at $45.72 a
barrel on the New York Mercantile Exchange—the lowest finish
for a most-active contract since May 4, according to FactSet
data. The Nymex settlement was later than usual on Wednesday,
with a CME spokesman citing a “technical issue that delayed
dissemination” of the WTI settlement prices.
August Brent crude
on the ICE Futures Europe exchange shed $2.06, or 4.1%,
to $48.06 a barrel. That was the lowest finish for a
most-active Brent contract since late November.
Early Wednesday, the U.S. Energy Information Administration
reported that domestic crude supplies
rose by 3.3 million barrels for the week ended June 2. The
unexpected rise followed eight consecutive weeks of declines.
The American Petroleum Institute late Tuesday
had reported a drop of 4.6 million barrels, while analysts
polled by S&P Global Platts forecast a fall of 3.5 million
“A combination of a drop in refinery runs, rising imports and a
shifting of crude from the [Strategic Petroleum Reserve] into
commercial inventories, has yielded a surprise build to crude
inventories,” said Matt Smith, director of commodity research
at ClipperData. “Despite the drop in refining activity, lower
implied demand for the products has meant we have seen a full
house of bearish builds.”
Gasoline stockpiles also climbed by 3.3 million barrels, while
distillate stockpiles were up 4.4 million barrels last week,
according to the EIA.
On Nymex, July gasoline
fell 6.3 cents, or 4.1%, to $1.491 a gallon,
while July heating oil
lost 5 cents, or 3.4%, to $1.416 a gallon.
Both products finished at their lowest levels since early May.
Meanwhile, natural-gas futures fell after a 2% gain a day
earlier, as the market braced for weekly U.S. supply data
Thursday. July natural gas
ended at $3.02 per million British thermal units, down
2.2 cents, or 0.7%.
Crude production last week edged lower, with total output down
24,000 barrels a day to 9.318 million barrels, the EIA data Wednesday showed.
However, in a monthly report issued Tuesday, the EIA said it expects U.S. crude production
in 2018 to average 10 million barrels a day, exceeding the
previous annual record of 9.6
million barrels a day in 1970.
Strong production out of the U.S. has been the main challenge
facing the Organization of the Petroleum Exporting Countries,
which together with a handful of non-cartel producers such as
Russia, have pledged to reduce their output by 1.8 million
barrels through March.
OPEC’s own rising production has also weighed on prices.
Despite the reported high level of compliance to the cut deal,
the cartel’s output likely rose by 270,000 barrels a day in May
to 32.12 million, according to S&P Global Platts.
Meanwhile in the Middle East, investors continued to keep an
eye on the diplomatic rift between Qatar and neighboring
Persian Gulf countries.
—Barbara Kollmeyer contributed to this