Oil prices rallied to a 2015 high after a report by the government showed that oil inventories fell for a sixth straight week last week and also showed that demand was stronger than expected
Light sweet crude for July delivery traded $1.29 or 2.1% higher to settle at $6143 a barrel on the New York Mercantile Exchange.
This is the highest the prices have settled this year based on the most active contracts.
Brent futures, the global benchmark jumped 82 cents or 1.3% to about $65.70 a barrel on the London based ICE Futures Exchange.
The Energy Information Administration reported Wednesday that crude inventories fell by 6.8 million barrels last week, more than 4 times the consensus estimate of analysts polled by Reuters.
Analyst polled by Reuters had forecasted a 1.8 million drawback.
“There’s no mistaking it: There’s pretty good demand for both crude oil and gasoline in the United States now and it could stay this way the next couple of months,” John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters.
The biggest drawdown this year came amidst greater crude demand as gasoline consumption jumped during the peak driving period in the US.
Inventories at Cushing, Okla., a key delivery and storage point for the benchmark Nymex contract also fell. However, the stockpiles of distillates, including diesel and heating oil grew for the same period.
Analysts expect the stockpiles to fall further with refineries running at higher rates this summer to turn crude into gasoline and other fuels in a bid to meet increased demand for the distillates.
“I would not be surprised to see another…20 to 30 million barrels being pulled out of storage” in the coming weeks, Donald Morton, senior vice president at Herbert J. Sims & Co., who runs an energy-trading desk, told the Wall Street Journal.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org