WTI oil futures trim gains after U.S. supply data
Investing.com - West Texas Intermediate oil trimmed gains on Wednesday, after data showed that oil supplies in the U.S. fell less than expected last week.
Crude oil for delivery in September on the New York Mercantile Exchange tacked on 20 cents, or 0.46%, to trade at $43.28 a barrel during U.S. morning hours. Prices were at around $43.52 prior to the release of the inventory data.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 1.7 million barrels in the week ended August 7.
Market analysts' expected a crude-stock fall of 1.8 million, while the American Petroleum Institute late Tuesday reported a decline of 0.9 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 51,000 barrels last week, compared to forecasts for a decline of 425,000 and following a drop of 542,000 barrels a week earlier.
Total U.S. crude oil inventories stood at 453.6 million barrels as of last week, remaining near levels not seen for this time of year in at least the last 80 years.
The report also showed that gasoline inventories decreased by 1.3 million barrels, while distillate stockpiles rose by 3.0 million barrels.
On Tuesday, Nymex oil fell to an intraday low of $42.69, a level not seen since March 2009, before closing at $43.08, down $1.88, or 4.18%.
New York-traded oil futures have been under heavy selling pressure in recent months as worries over high domestic U.S. oil production weighed.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by six last week to 670, the third straight weekly gain.
There are still about 60% fewer rigs working since a peak of 1,609 in October, though the pace of declines has slowed considerably in recent weeks, fueling concerns that U.S. shale production could rebound in the months ahead.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery inched up 47 cents, or 0.96%, to trade at $50.18 a barrel.
A day earlier, London-traded Brent prices lost $1.31, or 2.57%, to end at $49.71. Brent tumbled to $48.24 on Monday, the weakest level since March 2009.
In its monthly report released earlier in the session, the International Energy Agency said that global oil demand is forecast to increase by 1.6 million barrels a day this year, raising its projection from last month by 200,000 a day.
However, the agency warned that a global oil glut will last through next year, saying that, "while a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016--suggesting global inventories will pile up further."
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $6.90 a barrel, compared to $6.63 by close of trade on Tuesday.
In other news, China allowed the yuan to fall sharply for the second day as policymakers look to prop up the nation's ailing economy.
Some market analysts feared that the rapid decline in the value of the yuan could ignite a currency war that would destabilize the global economy.
Risk-related assets sold-off, with global stocks, emerging market currencies and commodities all under pressure, while safe-haven assets, such as government bonds and gold, saw a boost in demand.
The U.S. dollar came under pressure as China's surprise move to devalue its currency fanned hopes that the Federal Reserve could delay raising interest rates until the very end of 2015.
The dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 1.1% at 96.17 early Wednesday, the lowest level since July 13.
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