NEW YORK – Oil prices edged higher on Wednesday after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited price gains.
U.S. crude inventories USOILC=ECI fell 6.5 million barrels last week, government data showed, steeper than the expected decrease of 2.7 million barrels. Refiners processed nearly 17.6 million barrels of crude, surpassing a record set in May and the most for any week since the U.S. Department of Energy started keeping data in 1982.
Brent crude LCOc1, the global benchmark, was up 14 cents at $52.28 at 11:17 a.m. EDT (1517 GMT), after two days of declines. U.S. West Texas Intermediate (WTI) crude CLc1 gained 3 cents to $49.20.
“A drop in crude oil imports and another step up in refinery utilization accounts for the bulk of the decline in crude inventories,” said David Thompson, executive vice president at Powerhouse, an energy-specialized commodities broker in Washington, D.C..
“Demand for both gasoline and distillate fuels remains strong but it’s worth noting that gasoline demand should be strong at this time of year and we are drawing closer to the end of summer driving season.”
The data showed gasoline stocks USOILG=ECI, rose by 3.4 million barrels, confounding expectations in a Reuters poll for a drop of 1.5 million barrels. Gasoline futures RBc1 fell about 1 percent to the lowest in nearly two weeks.
From a technical perspective, $48.16-$48.37 a barrel region is a key zone of support for front-month WTI futures, Thompson said.
The drop in U.S. crude stocks also raised hopes that OPEC-led output cuts were helping wipe out a three-year global supply glut.
The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) under a deal set to run until March 2018.
The deal has supported prices but an output recovery in Libya and Nigeria, OPEC members exempt from the cut, has complicated the effort. U.S. shale oil drillers have also ramped up production.
OPEC officials met this week in Abu Dhabi to boost adherence to the supply cuts. In a statement after the meeting, OPEC said the conclusions reached would boost compliance. Still, some analysts remained sceptical.
“The statement on the OPEC website following the Abu Dhabi meeting was short on substance,” Vienna-based JBC Energy said.
Top OPEC exporter Saudi Arabia, keen to get rid of the glut, will cut crude allocations to customers in September by at least 520,000 bpd, an industry source said on Tuesday.
Additional reporting by Alex Lawler in London, Aaron Sheldrick; editing by Dale Hudson and Jason Neely