Oil prices swung over a wide range but ended little changed Wednesday, as a dovish Federal Reserve statement helped the market recover from a selloff after disappointing U.S. stockpile data.
Light, sweet crude for July ended the day down 5 cents, or 0.1%, at $59.92 a barrel on the New York Mercantile Exchange, after ranging more than 4% between intraday highs and lows compared with Tuesday's settlement.
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Prices jumped in early trading on expectations that weekly U.S. inventory data would reflect strong commercial and consumer demand for oil and refined fuels such as gasoline. But the report disappointed bullish investors, showing refinery processing rates declining last week and commercial gasoline inventories rising amid lower retail demand.
"The market was all geared up," said Phil Flynn, account executive at Chicago futures brokerage Price Futures Group. "When we failed to live up to that expectation, it put a damper on the entire report."
The market sold off after the news and remained in the red until the release of the Fed statement at 2 p.m. EDT. The statement indicated little change in the Fed outlook but proved bullish for oil prices as a signal that easy-money policies would remain for now.
"The statement is pretty benign," said Jason Schenker, president of Austin, Texas, consultancy Prestige Economics. "That takes away some of the risk of an accelerated removal of accommodative policies, which would otherwise slow demand (for oil) and push prices lower."
The data from the U.S. Energy Information Administration showed crude stockpiles fell by 2.7 million barrels last week and gasoline stocks rose 460,000 barrels. The oil inventory decline was the seventh week in a row, the longest since the last seven-week stretch between late 2013 and early 2014. Still, the EIA noted: "U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years."
Some analysts and investors were watching for signs in the data that the long boom in U.S. shale oil production is finally ebbing. The EIA's weekly estimate of domestic oil production did decline, by 21,000 barrels to 9.59 million barrels a day, though with an asterisk: all of the production decline could be accounted for in Alaska, while production in the lower 48 states actually increased.
The global Brent crude contract for August ended the day up 17 cents, or 0.3%, at $63.87 a barrel. In refined products, U.S. gasoline futures lost 2.4 cents, or 1.1%, to $2.1005 a gallon, and diesel for July rose 2.49 cents, or 1.3%, to $1.9098 a gallon.
(By Christian Berthelsen)