Oil futures rebounded on Wednesday with West Texas Intermediate crude snapping a five day losing streak after the US Energy Information Administration reported a third straight weekly fall in crude inventories.
The EIA reported that crude inventories fell by an unprecedented 2.7 million barrels last week with gasoline and distillate inventories also declined.
While the decline was more than three times the consensus forecast of analysts polled by Reuters, it was about half the 5.2 million barrel drop reported by industry operator American Petroleum Institute. The difference disappointed most market bulls.
“It’s a fairly neutral report at the best as the weekly change is mildly bullish within a bearish overall stock situation,” James L. Williams, energy economist at WTRG Economics in London, Arkansas, told the Wall Street Journal.
“The stockpiles are in excellent shape with crude inventories about 90 million barrels above year-ago levels, while refinery utilization rates were only a little higher at above 92 percent.”
The gains were however capped by a robust dollar with the dollar strengthening for a third straight session on hopes that the Federal Reserve would give a clear indication on the timing of the monetary policy.
Light sweet crude for July delivery, the new front month contract, added 83 cents or 1.4% at $58.82 a barrel in the New York Mercantile Exchange.
Brent for July delivery most recently traded 72 cents or 1.1% higher at $64.74 a barrel in the London based ICE futures exchange.
The rally was also aided by economic data from Japan with data from the government showing that the world’s third largest economy grew by an annualized rate of 2.4% in the first quarter of 2015.
“Japan is one of the major importers of crude oil and growth in this region would definitely be favorable for crude demand,” Singapore-based brokerage Phillip Futures, told Reuters.
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