By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures rallied roughly 3% Wednesday after a weekly U.S. inventories report showed a larger-than-expected decline in crude-oil supplies.
Crude for August delivery CL1Q +2.85% gained $2.76, or 2.9%, to $95.64 a barrel on the New York Mercantile Exchange, near the highs so far for the day.
It traded as high as $95.84 a barrel, after wavering between small gains and losses in electronic trading and gaining modestly after Greek lawmakers approved an austerity plan aimed at paving the way for more aid and staving off default. Read more about the Greek vote.
Oil rallied 2.5% on Tuesday, the biggest one-day percentage gain for oil since May 18, pulling the commodity off four-month lows.
Wednesday’s rally came after the Energy Information Administration reported a decline of 4.4 million barrels in crude inventories for the week ended June 24.
Analysts polled by Platts had expected a decline of around 1.7 million barrels.
The EIA reported gasoline stocks down 1.4 million barrels, against expectations of an increase of 700,000 barrels.
Gasoline for August delivery RB1Q +3.54% added 9 cents, or 3.4%, to $2.91 a gallon.
Supplies of distillates, which include heating oil and diesel, increased 300,000 barrels, the EIA said. The analysts surveyed had seen an addition of 1.8 million barrels.
August heating oil HO1Q +3.25% advanced 9 cents, or 3.2%, to $2.93 a gallon.
Europe’s benchmark, Brent crude, added to earlier gains. The August contract advanced $3.19, or 2.9%, to $111.96 a barrel on ICE Futures in London.
Wednesday also marks the deadline for bids for the newly released 30 million barrels of oil made available by the U.S., part of the 60 million barrels scheduled to be released by the International Energy Agency.
Most analysts expect only a portion of the oil offered will actually be sold, as was the case when emergency reserves were released in the aftermath of Hurricane Katrina in 2005.
Analysts at J.P. Morgan disagreed. “The crude market is tighter and we expect that a large proportion, if not all, of the barrels will be sold,” they said.
Barclays Capital energy analysts said that uncertainty over the likely timing and level of resumption of oil output from Libya is also a focus for energy markets. The Libyan conflict was the main reason given for the IEA release.
“The confusion regarding the ability of Libyan oil to return swiftly to the oil market remains,” the Barclays analysts said. “While not ruling out the possibility of some oil trickling out of the country, we would not expect a steady export flow of 1.3 million barrels a day from Libya in the next few months.”
