Investing.com – WTI crude oil prices settled higher on Wednesday as data showed a massive draw in U.S. crude supplies despite an ongoing expansion in output.
On the New York Mercantile Exchange crude futures for July delivery rose 28 cents to settle at $66.64 a barrel, while on London's Intercontinental Exchange, Brent gained 75 cents to trade at $76.62 a barrel.
Inventories of U.S. crude fell by 4.143 million barrels for the week ended June 8, well above expectations for a draw of 1.440 million barrels, according to data from the Energy Information Administration (EIA).
The unexpected rise in crude supplies emerged as imports fell, while the widening spread between Brent and WTI crude prices encouraged U.S. exporters to ramp up exports.
Crude imports fell 247,000 barrels per day (bpd) last week to 8.1 million barrels per day (bpd), while exports rose 300,000 bpd. A 3% uptick in refinery activity, saw product inventories such as gasoline and distillate fall sharply, underpinning the size of the draw in crude supplies.
Gasoline inventories – one of the products that crude is refined into – fell by 2.271 million barrels, confounding expectations for an increase of 0.443 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – unexpectedly fell by 2.101 million barrels, topping expectations for a build of 0.200 million barrels.
The unexpected draw in gasoline inventories was supported by rise in U.S. gasoline demand to an estimated 9.88 million bpd –a record high.
U.S. oil output, meanwhile, continued its expansion rising 0.1m bpd to a record 10.9 million bpd, according to preliminary EIA data, strengthening the United States' position as the second largest oil producer behind Russia.
The uptick in US output arrives at a time when the world's other two largest producers – Russia and Saudi Arabia – raised output, stoking investor fears major oil producers would continue to expand output to plug falling supplies from Venezuela and Iran.
Those fears were exacerbated after the International Energy Agency (IEA) estimated output from Venezuela and Iran could fall by 1.5 million a day next year from current levels, raising the prospect of OPEC increasing output.
"To make up for the losses, we estimate that Middle East OPEC countries could increase production in fairly short order by about 1.1 mb/d and there could be more output from Russia on top of the increase already built into our 2019 non-OPEC supply numbers," the IEA said.
In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018 and is expected to come under review at the oil-cartel's next meeting on June 22.