Futures Movers: U.S. oil prices climb to a more than 2-month high as domestic crude supplies, Cushing stocks drop

Futures Movers

EIA reports a 5 million-barrel weekly fall in U.S. crude supplies

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Oil futures climbed on Wednesday, with U.S. prices trading at their highest in over two months on the back of a second-straight weekly decline in domestic crude supplies and a drop in stocks at the Cushing, Okla. storage hub.

“Who would have thought that only a few weeks after hitting sub-zero, oil prices would stage a solid recovery back towards the $30 region?” said Lukman Otunuga, senior research analyst at FXTM. On the eve of the expiration of the May WTI contract, futures prices on April 20 settled at a negative price, implying that investors would need to pay buyers to take delivery of crude oil amid dwindling storage space.

“With economies easing lockdown measures, oil could edge higher in the near term,” Otunuga told MarketWatch. “However, gains may be capped by global growth fears and renewed U.S.-China trade tensions.”

On Wednesday, July West Texas Intermediate oil

which is the most-actively traded and the front-month contract, was up 83 cents, or 2.5%, at $32.79 a barrel on the New York Mercantile Exchange. A settlement around this level would be the highest in roughly 10 weeks, based on the front-month contracts, FactSet data show.

Meanwhile, global benchmark Brent crude for July delivery


picked up $1.26, or 3.6%, at $35.91 a barrel on ICE Futures Europe, after retreating 0.5% on Tuesday.

The Energy Information Administration reported Wednesday that U.S. crude inventories fell by 5 million barrels for the week ended May 15, marking a second weekly decline in a row. That compared with a forecast by analysts polled by S&P Global Platts for an average increase of 2.4 million barrels. The American Petroleum Institute on Tuesday reported a decline of 4.8 million barrels.

The EIA data showed crude stocks at the Cushing storage hub fell by about 5.5 million barrels for the week, easing concerns over tightening storage space.

Gasoline supply unexpectedly climbed by 2.8 million barrels, while distillate stockpiles rose 3.8 million barrels. The S&P Global Platts survey had shown expectations for a supply decline of 3.5 million barrels for gasoline, while distillate stocks were forecast at 3.2 million barrels higher.

On Nymex, June gasoline

rose 1.3% to $1.0592 a gallon, while June heating oil

added 3.9% to $1.0118 a gallon.

Read:Signs of a rebound in gasoline demand hint at higher oil prices

June natural gas

rose 1% to $1.848 per million British thermal units ahead of Thursday’s EIA update on U.S. supplies of the commodity.

An agreement between the Organization of the Petroleum Exporting Countries and their allies to cut some 9.7 million barrels a day in oil through the end of June have helped to stem a flood of crude against a backdrop of demand that had been declining, hurt by lockdowns to stop the spread of COVID-19.

Production in the U.S. has also declined, with the EIA on Wednesday reporting that total oil output fell by 100,000 barrels a day to 11.5 million barrels a day last week. In a separate report issued Monday, the EIA forecast further a decline in domestic shale-oil production.

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