LONDON – Oil rose on Wednesday on U.S. demand although the finer points of weekly data from there tempered its rally.
Brent futures were up 73 cents at $64.43 a barrel by 1449 GMT, having touched a high of $65.47. Front month U.S. crude futures were up 24 cents at $60.21 per barrel.
Some of the steam was taken out of the rally after data from the U.S. Energy Information Administration, showed that U.S. gasoline inventories rose unexpectedly and stocks at Cushing rose for the first time since April, while refinery utilization rates fell.
Investors had been expecting gasoline stocks to fall due to strong demand ahead of the summer driving season.
“The decline in refinery utilization is also bearish for crude oil price, since any diminution in demand will cause the recent trend of crude oil inventory declines to reverse,” said John Kilduff, partner at Again Capital LLC in New York.
JP Morgan said in its weekly oil research note that U.S. production had reached a new high this week but would start to drop.
An expected fall in U.S. crude production because of the relatively high cost of producing shale has also supported prices.
Despite the demand strength in the United States and Asia, prices have mostly stayed below $65 a barrel this year, compared with Brent crude’s $115 this time last year.
An excess supply of oil in the Atlantic basin has seen traders leave full tankers at sea.
“There are so many tankers floating for prompt delivery that people will want to see the fall in shale production, rather than predictions of a decline, before it will give much support,” said Maarten van Mourik, an independent oil economist in Paris.
Yet some analysts expect prices to rise somewhat going into the second half of the year because of strong demand and an expected fall in stocks.
“Fundamentals are at an inflection point and will improve from here, with high refinery runs this summer and sequentially declining U.S. crude production. As crude stocks erode, prices will gradually strengthen,” United States-based Pira Energy said.
Strong U.S. fuel demand, this week’s tropical storm, Canadian wildfires that led to the closure of oil production and continuing stock withdrawals have resulted in U.S. prices outperforming Brent contracts, pulling down Brent’s premium <CL-LCO1=R> to around $3 a barrel.
(Additional reporting by Robert Gibbons in New York, Henning Gloystein in Singapore, Editing by William Hardy and David Goodman)
This article was from Reuters and was legally licensed through the NewsCred publisher network.