Crude at five-month high as U.S. gasoline stockpiles tumble

Crude closed at a five-month high after U.S. government data showed the biggest decline in gasoline stockpiles since 2017, offsetting an increase in crude inventories.

Futures in New York rose 1 percent on Wednesday, while gasoline prices jumped 3.5 percent. Domestic fuel stockpiles tumbled more than analysts expected, while crude supplies expanded for a third straight week, according to the Energy Information Administration.

“It seems like this is more of a gasoline story,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. We’re “continuing to see healthy declines in gasoline inventories, which ultimately bodes well for crude, because there will be demand for crude as well.”

Oil has climbed more than 40 percent in New York this year as the Organization of Petroleum Exporting Countries works to trim output and help balance global oil markets. Further supply threats due to fighting in Libya, as well as troubles in Venezuela, have also supported crude oil. Yet, gains remain limited due to fears of a slowing global economy. On Tuesday, the International Monetary Fund predicted this year would see the weakest growth since the financial crisis.

Fighting near the Libyan capital continued, forcing the United Nations to postpone an international peace conference to reconcile feuding factions and threatening to plunge the country back into civil war.

West Texas Intermediate for May delivery climbed 63 cents to settle at $64.61 a barrel on the New York Mercantile Exchange. Prices remain above the 200-day moving average after they breached that level earlier this month for the first time since October.

Gasoline for May delivery closed at $2.0692 a gallon, the highest level since October.

Brent for June settlement advanced $1.12 to close at $71.73 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $7.08 to WTI for the same month.

Meanwhile, the EIA report also showed U.S. crude stockpiles rose 7.03 million barrels last week to the highest level since November 2017. U.S. crude production held at a record 12.2 million barrels a day.

Other oil-market news: The U.S. is looking to  strike an “appropriate balance” between protecting oil markets and tightening sanctions on Iranian oil, U.S. Assistant Secretary of State Francis Fannon said at Columbia University. OPEC said its oil production  plunged last month as its planned supply cutbacks were amplified by the crisis in Venezuela, and pointed to a much tighter global crude market in coming months. Russian President Vladimir Putin kept his options open on extending the OPEC+ production cuts, and said that he doesn’t support an “uncontrollable” increase in oil prices.

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