Oil prices turn positive as drop in gasoline stockpiles offsets massive crude inventory build - CNBC
Oil prices turned positive on Wednesday after government data showed a surprise drop in gasoline in storage that offset a huge rise in U.S. crude stockpiles.
International Brent crude futures were trading at $55.54 per barrel at 11:08 a.m. ET (1608 GMT), up 49 cents, or 0.9 percent, from their previous close.
U.S. West Texas Intermediate (WTI) crude was at $52.55 a barrel, up 38 cents, or 0.7 percent.
U.S. commercial crude inventories rose by 13.8 million barrels in the week through Feb. 3 to 508.6 million. That compared with analysts' expectations for a 2.5 million barrels increase.
The EIA data were just shy of figures reported by the American Petroleum Institute (API) on Tuesday, which showed crude inventories jumping by 14.2 million barrels to 503.6 million barrels.
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Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels, EIA said. The builds in crude stockpiles came as refineries cut output and crude imports jumped.
Weekly U.S. oil production also ticked up, preliminary data showed, continuing a trend that has pushed the nation's four-week average output higher lately.
But the EIA data on fuel inventories provided some relief.
Gasoline stocks fell by 869,000 barrels, compared with analyst expectations in a Reuters poll for a 1.1 million-barrel gain. API had said gasoline stocks rose by 2.9 million barrels, raising concerns about fuel demand.
The EIA figures showed a moderate uptick in gasoline demand. It has recently fallen to unusually low levels.
"It appears gasoline demand as measured for the week has rebounded to near-normal levels, which offsets some of the report's other bearish elements. The recent plunge in gasoline demand was a conundrum," John Kilduff, founding partner at energy hedge fund Again Capital told CNBC.
Distillate stockpiles, which include diesel and heating oil, rose by 29,000 barrels, less than expectations for a 300,000-barrel increase, the EIA data showed.
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Apart from rising stocks, U.S. oil production is also increasing. The Energy Information Administration (EIA) expects U.S. crude output to rise 100,000 bpd to 8.98 million barrels in 2017, and then to jump by 550,000 bpd in 2018.
Outside the United States, there were other signs of market weakness. China's 2016 oil demand grew at the slowest pace in at least three years, Reuters calculations based on official data showed.
China's implied oil demand growth eased to 2.5 percent in 2016, down from 3.1 percent in 2015 and 3.8 percent in 2014, led by a sharp drop in diesel consumption and as gasoline usage eased from double-digit growth.
The slowing occurred as the economy expanded by only 6.7 percent in 2016, the slowest pace in 26 years.
Slowing demand and ongoing high inventories undermine efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to cut output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market.
Despite this, both Brent and WTI are down over 6 percent since early January, when the cuts started to be implemented.
— CNBC's Tom DiChristopher contributed to this report.