NEW YORK (Reuters) – Oil prices fell on Wednesday even though U.S. crude stockpiles declined by the most in a year, as the government also reported that domestic crude production was edging higher.
U.S. crude inventories dropped for a seventh consecutive week, falling 8.95 million barrels last week to 466.5 million barrels to their lowest since January 2016. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest levels since October 2015, the Energy Information Administration said.
The draw was far more than double the 3.1 million barrel decline in crude inventories that analysts had forecast.
However, gasoline inventories did not decline as expected, and the data also showed that U.S. crude output rose to 9.5 million barrels per day from 9.4 million barrels a week earlier.
Rising U.S. output could add to the global crude glut that prompted the Organization of the Petroleum Exporting Countries and other oil producers to curtail production to boost prices.
Traders weighed the bullish stockpile draw and bearish production data.
“I would describe this as a bullish report and probably the effect would be we’re going to keep ourselves pinned here waiting for the next signal,” said Gene McGillian, director of market research at Tradition Energy.
Seasonally, U.S. demand usually picks up during the summer. “If we see these draws past Labor Day, it will drive the market, possibly past $50.
Brent crude futures LCOc1 were down 18 cents at $50.62 per barrel by 11:50 a.m. EDT, after trading as high as $51.40.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.20 a barrel, down 35 cents, after rising as high as $47.99.
Analysts said ample supplies were limiting price gains.
“This bullish print is being tempered somewhat by unchanged gasoline inventories versus the expectation of a draw,” said Matt Smith, director of commodity research at ClipperData.
“The peak of summer driving season has now passed, and demand for crude should wane also as refinery runs drop, Gasoline demand will ebb as summer road trips are mostly over and children head back to school.”
U.S. gasoline stocks were unchanged, compared with expectations in a Reuters poll for a 1.1 million-barrel drop. OPEC and other major producers including Russia have pledged to restrict output. Still, U.S. oil production has soared almost 12 percent since mid-2016.
“OPEC and Russia still face an uphill battle in reducing the global supply surplus in the face of growth in output elsewhere and less than compliant behavior in their midst (Iraq, UAE),” French bank BNP Paribas said.
OPEC member Angola released a loading plan showing October exports were planned at a 13-month high.
On the demand side, analysts see a gradual slowdown in fuel consumption growth.
Energy consultancy Wood Mackenzie said U.S. gasoline demand was peaking due to improving fuel efficiency and the rise of electric vehicles.
In China, state-owned China National Petroleum Corporation (CNPC) said gasoline demand would likely peak around 2025 and outright oil consumption would top out around 2030.
This means oil demand from the world’s two biggest consumers may soon stall. Consumption has already peaked in Europe and Japan.