New York (Reuters) – Oil prices rose on Wednesday, with U.S. crude rebounding from two-month lows, after the U.S. government reported a ninth-straight week of crude inventory declines that came within expectations in a market worried about a fuels glut.
U.S. gasoline prices, however, extended losses, hitting a four-month low after the data from the U.S. Energy Information Administration showed a surprise build in supplies of the motor fuel despite rising summer demand.
Brent crude futures' front-month contract was up 50 cents, or 1%, at $47.16. It fell as much 76 cents earlier to an intraday low of $45.90.
The front-month August contract in U.S. crude's West Texas Intermediate (WTI) futures rose 24 cents, or 0.5%, to $44.89 a barrel.
WTI's August contract, which will expire after Wednesday's settlement, earlier hit a two-month low of $43.69. That was the lowest for a WTI front-month since May 10. It also was below the 100-day moving average of $43.85.
Oil Inventories Fall More Than Expected
The EIA said crude inventories fell 2.3 million barrels in the week to July 15, compared with analysts' expectations for a decrease of 2.1 million barrels.
"While in line with expectations, the drawdown is large enough to provide support, and refiner demand for crude remains elevated," said John Kilduff, partner at New York energy hedge fund Again Capital.
The inventory report also showed a surprise increase in gasoline stocks, which rose by 911,000 barrels, compared with forecasts for stocks to remain unchanged.
Gasoline Supplies Rise During Peak Demand
Stocks of the motor fuel rose in spite of gasoline output slipping 168,000 barrels per day and refinery crude runs rising 319,000 barrels per day as utilization rates edged up 0.9% percentage points to 93.2% of total capacity, the EIA data showed.
"We continue to see these builds in gasoline, which suggest the market is fundamentally not sound to sustain a rally," said Tariq Zahir, a trader in WTI crude spreads at Tyche Capital Advisors in New York.
The market's attention has lately been on an unexpected oversupply in fuels during the U.S. peak summer driving season.
As storage on land tightened, fuel prices weakened, prompting traders to store diesel on tankers at sea for later delivery. Even if crude output tapers, some say the glut may continue to pressure prices.