Oil continued to trade at seven-month highs, as better-than-expected oil inventory data supported the sentiment.
WTI (West Texas Intermediate) crude oil futures contracts for July delivery were seen trading at $49.32 per barrel, a rise of 1.4%. Brent crude oil was trading at $49.51 per barrel, a rise of 1.8%.
According to data released by the U.S. Energy Information Administration (or EIA) at 10:30 AM EST, crude oil inventory levels fell by 4.2 million barrels to 537.1 million barrels in the week ended May 20, 2016. This was a larger fall than the Market had anticipated, and it supported crude oil’s price surge.
Earlier, a Reuters poll on the weekly inventory change had indicated an expected fall of 2.5 million barrels. On May 24, 2016, the American Petroleum Institute reported an inventory fall of 5.1 million barrels, surpassing market expectations.
In recent weeks, crude oil prices were supported by supply disruptions in the Canadian oil sand fields, Nigeria, Libya, and Venezuela. However, these supply disruptions have started to subside, shifting the Market’s focus toward the inventory data.
Even though the wildfires in Fort McMurray, Canada, decreased the country’s output by ~1.5 million barrels per day, crude oil imports to the United States from Canada rose by 0.5 million barrels per day.
Signs of increased production by OPEC (Organization of the Petroleum Exporting Countries) are weighing on crude oil. The organization is scheduled to meet in Vienna, Austria, on June 2, 2016, to discuss a production freeze.