Oil futures finished higher on Wednesday, with U.S. prices up a fifth consecutive session as government data showed that domestic crude inventories dropped for a seventh week in a row, the longest stretch of declines in a year and a half.
Prices had also climbed in the wake of the Federal Reserve’s decision Wednesday afternoon to cut its key interest rate by a quarter percentage point .
West Texas Intermediate crude for September delivery CLU19, +0.09% on the New York Mercantile Exchange gained 53 cents, or 0.9%, to settle at $58.58 a barrel, for a fifth straight session rise. For the month, U.S. benchmark prices ended about 0.2% higher, according to Dow Jones Market Data. That was their sixth monthly rise of the year.
Meanwhile, global benchmark September Brent crude BRNU19, +0.71%, which expired at the end of the session, added 45 cents, or 0.7%, to $65.17 a barrel on ICE Futures Europe—settling roughly 2.1% lower for the month. October Brent crude BRNV19, -0.81%, which is now the front-month contract, tacked on 42 cents, or 0.7%, to $65.05 a barrel.
The Energy Information Administration on Wednesday reported that U.S. crude supplies declined by 8.5 million barrels for the week ended July 26. Analysts polled by S&P Global Platts, on average, expected a decline of 3.9 million barrels, while the American Petroleum Institute on Tuesday reported a 6 million-barrel drop.
“We’ve seen a seventh consecutive draw to crude stocks, led by a whopping drop in imports,” said Matt Smith, director of commodity research at ClipperData. The latest draw “means inventories are down 49 million barrels in the last seven weeks—now at their lowest since last November.”
The seven-week stretch of falling crude supplies is the longest since the 10-week decline from the week ended Nov. 17, 2017 to Jan. 19, 2018, according to an analysis of EIA data provided Sevens Report Research.
“The solid draw comes despite production rebounding after Hurricane Barry,” said Smith. But “a drop in gasoline and distillate inventories have helped to compound the bullish crude draw, with product draws encouraged by [crude] refinery runs holding well below year-ago levels.”
The EIA data also showed that gasoline inventories were also down by 1.8 million barrels, while distillate stockpiles edged lower by 900,000 barrels last week. The S&P Global Platts survey had shown expectations for a supply decrease of 1.1 million barrels for gasoline, while distillates were forecast to edge up by 400,000 barrels.
On Nymex, August gasoline RBQ19, +0.27% settled at $1.902 a gallon, up about a half cent, or 0.3%, for the session, with front-month contract prices logging a fall of 2.1% for the month, while August heating oil HOQ19, +0.88% rose 1.1 cents, or 0.6%, to $1.955 a gallon, with prices up roughly 0.5% from the month-ago finish for the front-month contract. The August contracts expired at the day’s settlement.
Traders monitored a fire Wednesday at the ExxonMobil Baytown complex, which includes a 584,000 barrel-per-day oil refinery. ExxonMobil, however, said the fire broke out at the Baytown Olefins Plant, one of the world’s largest ethylene plants. This is not expected to have a major impact on gasoline prices, said Patrick DeHaan, head of petroleum analysis at GasBuddy.
U.S. oil prices had dipped toward session lows right before the Fed announcement Wednesday, then climbed back up after the news despite a climb in the benchmark ICE U.S. Dollar DXY, +0.49%. The interest-rate cut may have served to soothe some worries about a slowing global economy, but a stronger dollar can weigh on dollar-denominated commodity prices such as oil.
Read: Oil bulls look to Fed rate cut to overcome demand worries
Back on Nymex, September natural gas NGU19, +4.73% added 9.6 cents, or 4.5%, to $2.233 per million British thermal units, with prices paring their monthly loss to 3.3%, according to Dow Jones Market Data.
The EIA on Thursday is expected to reported a weekly increase of 52 billion cubic feet in natural-gas stocks in U.S. storage, according to an S&P Global Platts analyst survey.
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