MW: Oil tops $58 as supplies at U.S. storage hub ease
Oil futures rallied above $58 a barrel on Wednesday, with prices trading at their highest levels of the year on the heels of a drop in the U.S. dollar and data showing a decline in crude supplies at the nation’s oil-storage hub.
June crude CLM5, +2.63% traded at $58.31 a barrel, up $1.25, or 2.2%, on the New York Mercantile Exchange. It was trading around $57.40 before the supply data.
Meanwhile, June Brent crude LCOM5, +2.09% on London’s ICE Futures exchange gained 95 cents, or 1.5%, to $65.59 a barrel.
Early Wednesday, the U.S. Energy Information Administration on Wednesday reported that crude inventories rose 1.9 million barrels for the week ended April 24. Analysts polled by Platts forecast a crude-stock climb of 1.4 million barrels, but late Tuesday the API reported a 4.2 million-barrel increase.
The EIA has now reported its 16th straight week of rising crude inventories.
But “two big risks to oil prices are easing: [the] U.S. dollar rally, and U.S. oil-storage rally,” said Richard Hastings, macro strategist at Global Hunter Securities.
The storage crisis at the U.S. storage hub of Cushing, Okla. seems to be over, for now, and the weak GDP story is also contributing to a further weakening in the U.S. dollar DXY, -1.19% he said. It “might be hard to get a stronger rally in oil prices, but it’s very hard for prices to breakdown from here.”
Crude supplies at Cushing fell 514,000 barrels in the latest week.
Gasoline supplies were up 1.7 million barrels, while distillate stockpiles fell 100,000 barrels last week, according to the EIA. The Platts survey showed expectations for a rise of 80,000 barrels for gasoline stockpiles and an increase of 700,000 barrels for distillates, which include heating oil.
On Nymex, May gasoline RBK5, +1.29% was up 1.2 cents, or 0.6%, at $2.014 a gallon, while May heating oil HOK5, +1.62% tacked on 2.1 cents, or 1.1%, to $1.938 a gallon.
June natural gas NGM15, +1.81% traded at $2.581 per million British thermal units, up 4.4 cents, or 1.7%.
The U.S. Federal Reserve statement due at 2 p.m. Eastern, shortly before the close of the regular Nymex trading session, will drive sentiment in wider financial markets. Any major currency moves will also affect oil markets, as oil is a dollar-denominated commodity.
Oil prices were volatile Tuesday on reports that a U.S. Navy destroyer was sent to the Strait of Hormuz after Iranian patrol boats seized a Marshall Islands-flagged cargo ship.
Saudi Arabia, the biggest oil producer in the Middle East, saw a dramatic reshuffling of its top officials Wednesday. King Salman bin Abdulaziz replaced his crown prince and foreign minister, appointing his nephew Deputy Crown Prince Mohammed bin Nayef as his new heir apparent.
