Oil prices wavered between gains and losses Wednesday morning, after the U.S. Energy Information reported that crude stockpiles shrank sharply as foreign buyers clamored for cargoes of U.S. crude.
The amount of crude oil being held in U.S. storage tanks fell by 6 million barrels last week, according to the U.S. Energy Information Administration. Analysts and traders surveyed by The Wall Street Journal had anticipated a 300,000 barrel decline.
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A big jump in shipments of U.S. crude abroad helped drain oil inventories. U.S. crude oil exports surged to 1.984 million barrels a day -- an increase of close to 500,000 barrels a day from the previous week's level, which was also a record.
U.S. oil prices have traded at around a $6 discount to global prices, making it more lucrative to send vessels on long journeys from the Gulf of Mexico and sparking a frenzy of shipments of U.S. oil.
"We are the cheapest barrel out there, and it's pretty good quality crude. Everybody that can is going to try and buy U.S. crude," said Bob Yawger, director of the futures division at Mizuho Securities USA.
Crude for November delivery recently traded up 5 cents, or 0.1%, to $50.47 a barrel on the New York Mercantile Exchange. Brent, the global benchmark recently traded down 6 cents, or 0.11%, at $55.94 a barrel on ICE Futures Europe.
The difference between the two oil benchmarks has blown out to its widest in more than two years, but analysts said the growing global demand for U.S. crude will help narrow that gap.
Kyle Cooper, a consultant at Ion Energy Group, said Wednesday's data was largely bullish, but perhaps not enough to attract many new buyers, as speculative investors have already made big bets on rising oil prices. Many expect the recent surge in exports won't last, as it reflects how Hurricane Harvey temporarily pushed U.S. prices lower while global prices kept climbing.
"It looks like there wasn't enough good stuff to bring more buyers into the market," Mr. Cooper said, noting that U.S. crude production rose slightly, and petroleum demand in the U.S. eased.
The price of Brent nearly hit $60 a barrel last week but has since come down by around 6% after "edgy traders" reversed bullish positions to take profits, according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
"A return of the recent feel-good factor now seems like a distant prospect and any price gains will be hard won," Mr. Brennock noted.
The spike in the price of Brent last month was also "driven to a large extent by speculation," according to analysts at Commerzbank. "Brent is showing more and more signs of speculative excess," the analysts wrote in a note Wednesday.
The U.S. data Wednesday showed that gasoline stockpiles rose by 1.6 million barrels. Total inventories of petroleum products fell 6.1 million barrels.
Gasoline futures recently rose 0.94 cent, or 0.6%, to $1.5749 a gallon. Diesel futures were recently up 0.76 cent, or 0.43%, at $1.7581 a gallon.
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(END) Dow Jones Newswires
October 04, 2017 12:04 ET (16:04 GMT)