Oil futures climbed on Wednesday as traders weighed the outlook for crude demand as well as a second straight weekly rise in U.S. crude supplies.
Recent economic data from China came in weaker than the market expected, but the International Energy Agency on Tuesday lifted its global oil demand growth forecast.
West Texas Intermediate crude for June delivery
rose 56 cents, or 0.8%, to $71.42 a barrel on the New York Mercantile Exchange.
July Brent crude
the global benchmark, was up 52 cents, or 0.7%, at $75.43 a barrel on ICE Futures Europe.
Back on Nymex, June gasoline
rose 1.3% to $2.5123 a gallon, while June heating oil
edged up 0.5% to $2.3753 a gallon.
June natural gas
declined by 1.5% to $2.341 per million British thermal units.
The Energy Information Administration on Wednesday reported that U.S. commercial crude inventories rose by 5 million barrels for the week ended May 12.
That compared to an increase of 2.5 million barrels forecast by Robert Yawger, director of energy futures at Mizuho Securities USA, though analysts surveyed by The Wall Street Journal, on average, looked for crude inventories to show a fall of 800,000 barrels. On Tuesday, the American Petroleum Institute reported a 3.7 million barrel rise, according to a source citing the data.
The EIA report showed a weekly inventory decline of 1.4 million barrels for gasoline, while distillate stockpiles edged up by 100,000 barrels. Yawger had forecast weekly declines of 2 million barrels each for gasoline and distillates.
Also see: Here’s what might lead to a spike in gasoline prices this summer
Crude stocks at the Cushing, Okla., Nymex delivery hub climbed by 1.5 million barrels for the week, the EIA said, while stocks in the Strategic Petroleum Reserve fell by 2.4 million barrels.
Other market drivers
Crude fell Tuesday after disappointment in economic data out of China. Demand concerns have plagued crude, with both WTI and Brent suffering four straight weekly declines.
“Oil prices have been log-jammed between fundamentally oversold territory and lacking acute catalysts to shock prices materially higher over the near term,” said Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets, in a note. Real-time physical indicators remain mixed, at best, he said.
“The market always expected sloppy Q1 balances, but halfway through the second quarter and the physical market is not tracking meaningfully better, yet,” he wrote. “Many market hopes hinged on China’s re-opening as being a binary market moving event, but even that framework has been mixed…and peak turnarounds are more than a month away.”
Still, the Paris-based IEA, in its monthly report released Tuesday, said China’s demand for oil is growing at a faster-than-expected pace. The growing demand threatens to tighten crude markets and send oil prices higher as supply struggles to keep up, the report said. It lifted its forecast for global oil demand growth this year by 200,000 barrels a day to 2.2 million barrels a day.
Stephen Innes, managing partner at SPI Asset Management, said he wasn’t surprised that oil prices were moving higher after the IEA’s solid demand growth view and amid the Biden administration’s plans to repurchase up to 3 million barrels of crude oil for the SPR.