Crude oil is on track for its fourth gain in five days after U.S. government data showed a much larger than expected draw in commercial crude inventories last week, adding to growing evidence of supply pressures.
Oil Price Update
U.S. West Texas Intermediate (WTI) for October settlement rose $1.68, or 2.6%, yo $67.52 a barrel on the New York Mercantile Exchange. The black commodity is on track for its highest settlement in 12 days after prices plunged to multi-month lows last week. The U.S. benchmark has gained 4.5% over the past five days.
Brent crude, the international futures contract, rose $1.68, or 2.3%, to $74.31 a a barrel on London's ICE futures exchange. Brent futures have returned 4.8% over the last five days.
The U.S. Energy Information Administration (EIA) reported Wednesday that commercial crude inventories fell by 5.836 million barrels in the week ended Aug. 18. Analysts in a median estimate had called for a decline of 1.497 million barrels. Inventories spiked by 6.805 million barrels the previous week as imports surged.
In gasoline, EIA reported a build of 1.2 million barrels and an average production of 10.2 million barrels per day.
EIA's report corroborated separate industry data showing a large draw in inventories last week. The American Petroleum Institute (API) on Tuesday reported a decline of 5.17 million barrels. According to analysts, this may have sparked the early morning rally leading up to the EIA report.
Earlier in the week, the U.S. government announced it would sell 11 million barrels from the Strategic Petroleum Reserve to keep the market well supplied in anticipation of renewed sanctions on Iran.
The U.S. dollar's recent struggle to hold 13-month highs has also contributed to crude's upward momentum. The U.S. dollar index (DXY), which tracks the greenback's performance against a basket of six currencies, declined 0.2% to 95.10, a fresh two-week low. Since peaking at 96.73 on Aug. 14, DXY has declined 1.7%.