Crude prices recovered from multi-month lows to end higher after data from the US government showed sizable declines in US crude stockpiles and a fall I production levels.
Light sweet crude for September delivery ended 84 cents or 1.7% higher at $48.79 a barrel on the Ney York Mercantile Exchange. This is the highest one day percentage gain Since July 7th.
Brent Futures, the global benchmark advanced, inched up 8 cents or 0.2% to settle at $53.38 a barrel on the London based ICE Futures Exchange.
“The report seems to suggest that, at least in the short term, the bearish news has been over played,” Phil Flynn, senior market analyst at Price Futures Group, told Market Watch.
“Despite a recent uptick in [drilling] rigs, it looks like production still may be peaking.”
Data from the government backed Energy Information administration earlier in the day showed that inventories in the US fell by an unprecedented 4.2 million barrels last week; more than twenty times the 186,000 barrel decline consensus estimate of analysts polled by Reuters.
The latest inventor report sharply contracts with the data reported last week which reported a rise in the stockpiles to higher than the five year seasonal average.
“Although just one data point, the latest weekly data may have been enough to provide some support in the face of major headwinds for oil prices,” Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, told Reuters.
The EIA also reported that the gasoline demand in the US had risen 6.2% on a year on year basis after averaging about 9.52 million barrels a day over the last four weeks.
The Major benchmarks recently slipped into the bear market after declining by more than 20% after their most recent high on concerns that the gasoline demand during the US peak driving period, a robust US dollar and a stock market selloff I the world’s biggest energy consumer, China.
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