Investing.com – Oil futures rose 2% on Wednesday, as data showed another sharp drop in U.S. crude inventories and gasoline inventories fell for the first time in three weeks as fuel pump prices fell.
Crude for September delivery, or WTI, was up $2.11, or 2.2%, at $97.09 a barrel in New York trading as of 1:05 p.m. ET (17:05 GMT)
Crude oil for October delivery rose $1.60, or 1.6%, to $101.06 in London.
In its weekly report on oil conditions, the U.S. Energy Information Administration said U.S. crude inventories fell by 4.52 million barrels last week, compared with forecasts for a decrease of 1.5 million barrels. Crude inventories fell by 446,000 barrels last week after rising nearly 11.5 million barrels in the previous two weeks.
The latest drop came as the EIA reported a relatively small drawdown of 5.6 million barrels of crude from the Strategic Petroleum Reserve last week. Over the past month, oil reserves have been drawn down from the state’s oil reserves by between 6 million and 7 million barrels per week.
In the wake of the conflict in Ukraine and its sanctions on Russia, a major energy exporter, the Biden administration has relied heavily on reserves to add crude to the market to ease global oil shortages.
Helping the decline in crude inventories was exports, with U.S. crude exports rising sharply to 4.55 million bpd from 3.76 million bpd previously.
But more important than the crude oil balance is the gasoline data.
The EIA reported a decline of 3.3 million bpd in the week to July 22, after climbing a total of 9.32 million bpd in the weeks ended July 15 and July 8.
Industry analysts tracked by Investing.com expect gasoline to fall by around 1 million barrels last week.
The decline in gasoline, the main U.S. auto fuel, comes as the price of gasoline has fallen to $4.30 a gallon from a record high of $5.01 a gallon in mid-June.
Pumping demand for gasoline stood at 9.25 million barrels last week, just shy of 9.33 million barrels in the same week a year ago, EIA data showed. Pump demand stood at 8.5 million barrels last week, compared with 9.3 million barrels per week in the previous year.
“There’s no question that cheaper gas at the gas station has been driving people to fill up their tanks more often,” said John Kilduff, an energy market commentator and partner at New York-based hedge fund Again Capital.
“This could be a testament to the oil bulls, whose fortunes have been damaged by the build-up of inventories over the past two weeks. But on the flip side, once pump prices pick up on this data, gasoline consumption could fall. If anything , we see that demand for fuel is now more resilient than previously thought.”
EIA data also showed that the diesel fuel needed to make trucks, buses and trains, as well as the oil variant needed to fuel jet planes, fell by 784,000 barrels last week. Analysts forecast a drop of 500,000 barrels in distillates last week, after a 1.3 million barrel decline in the previous week.
The only bearish factor, if any, in the EIA report was the surge in U.S. crude oil production to 12.1 million bpd last week from 11.9 million bpd previously.