Crude oil prices rose for a fifth day Wednesday following a larger-than-expected drop in U.S. inventories, and after the Federal Reserve cut U.S. interest rates for the first time in more than 10 years, Kallanish Energy reports.
The front-month Brent crude futures contract, which expired Wednesday, rose 45 cents to settle at $65.17 a barrel. Brent posted a monthly decline of 2.1%. U.S. West Texas Intermediate crude futures gained 53 cents to settle at $58.58/Bbl, but rose 0.2% in July.
U.S. crude stockpiles fell for a seventh straight week, slumping 8.5 million barrels (Mmbbl) last week, the Energy Information Administration said, far exceeding analysts’ expectations for a decrease of 2.6 Mmbbl. (See story elsewhere in this issue.)
At 436.5 million barrels, U.S. crude inventories, excluding the Strategic Petroleum Reserve, were at the five-year average for this time of year, EIA said.
The drawdown came even as offshore production restarted as the effects of Hurricane Barry waned, with output rebounding to 12.2 million barrels per day (Mmbpd), near recent levels, from 11.3 Mmbpd a week earlier.
Gasoline stocks fell 1.8 Mmbbl, while distillate stockpiles dipped by 894,000 barrels.
In a separate report, EIA said U.S. crude oil output in May slipped from a monthly record high, falling 26,000 barrels per day, to 12.11 Mmbpd. (See story elsewhere in this issue.)
After its two-day policy meeting, the U.S. Fed cut interest rates, citing concerns about the global economy and muted U.S. inflation. The central bank signaled a readiness to lower borrowing costs further if needed.
The Fed said the rate cut should help return inflation to its 2% target, but that uncertainties about that outlook remain.
Libya’s Sharara oilfield, the country’s largest, shut after a problem on Tuesday with a valve on the pipeline linking it to the Zawiya oil terminal. State-owned National Oil Corp (NOC) declared force majeure on loadings of the crude grade on Wednesday.
OPEC oil output hit an eight-year low in July as a further voluntary cut by top exporter Saudi Arabia deepened losses caused by U.S. sanctions on Iran and outages elsewhere in the group, a Reuters survey found.
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