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Brent slips from 2015 peaks, US crude up on inventory draw
[NEW YORK] Brent prices fell on Wednesday while US crude rallied, after oil stockpiles in the world's top consumer unexpectedly drew down with refiners coming back online following Hurricane Harvey last month.
Brent slipped from 26-month highs to settle down 54 cents, or nearly 1 per cent, at US$57.90 a barrel, while US West Texas Intermediate crude (WTI) ended 26 cents, or 0.5 per cent, higher at US$52.14 but stayed below five-month highs. The market was hurt by strength in the dollar, which often moves in the inverse direction of oil prices.
US crude inventories fell 1.8 million barrels last week, the U.S. Energy Department said, versus forecasts for a 3.4 million-barrel build.
The crude draw supported oil prices, but petrol stocks surprisingly rose and stocks of distillates were down by less than anticipated.
"The crude number was definitely supportive but we're a little bit overbought, and the diesel figure wasn't bullish, and the dollar is keeping us back," said Phil Flynn, analyst at Price Futures Group in Chicago.
Refinery utilisation rates jumped 5.4 percentage points to 88.6 per cent of total capacity, the highest since Harvey hit on Aug 25, after most facilities had come back online.
The effects of that storm, as well as Hurricane Irma, which struck Florida earlier this month, may dampen demand for some time, potentially increasing petrol inventories while crude stocks fall thanks to renewed refining activity.
Oil prices have been supported by output curbs by the Organization of the Petroleum Exporting Countries (Opec) and other major producers, although US crude has lagged behind Brent amid concerns that US production-growth could stoke oversupply.
US crude production rose to 9.55 million barrels per day last week, higher than before Harvey hit the Gulf Coast, data showed.
With Brent futures commanding their highest premium over WTI WTCLc1-LCOc1 in more than two years, US crude has become increasingly competitive in foreign markets and exports hit a record of 1.5 million bpd last week, according to data.
"Seeing exports of US produced crude that large would pose a threat to the level that the Brent-WTI premium can go," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
Diesel exports were also rising, in part because lower US crude prices boosts margins for US refiners compared with those in Europe.
The dollar was higher, getting a boost from the nascent push for tax reform in Washington, DC.