Oil prices pulled back from session highs Wednesday despite weekly data showing a surprise drawdown in inventory.
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U.S. crude oil stockpiles for the week ended May 15 fell by 4.98 million barrels, according to the U.S. Energy Information Administration, versus an expected build of 1.15 million barrels. U.S. inventory, excluding the Strategic Petroleum Reserve, ended the week at 526.5 million barrels, or 10 percent above the five-year average for this time of year.
West Texas Intermediate crude oil, the U.S. benchmark, pared gains to 3.60 percent, for a price of $33.11 per barrel, after rising as much as 5.57 percent before the data’s release. Brent crude oil, the international standard, climbed 4.18 percent to $36.10.
"What we've seen now over the past three weeks is barrels moving into the Strategic Petroleum Reserve," Stephen Schork, founder and editor of the daily oil newsletter The Schork Report, told FOX Business’ Stuart Varney on Wednesday. "Clearly, demand is picking up, but I'm not so sure it's as bullish a driver fundamentally as it first appears."
Inventory at the Strategic Petroleum Reserve increased by 1.9 million barrels, or 0.3 percent, to 641.6 million barrels, the EIA said. Meanwhile, stockpiles at Cushing, Oklahoma, the U.S.' key oil hub, fell by 5.5 million barrels to 56.9 million.
Total domestic production fell 100,000 barrels per day to 11.6 million barrels, the EIA said.
West Texas crude for July delivery rallied 80 percent through Tuesday after bottoming at $17.60 per barrel on April 29.
Schork warns the recent rally in crude oil prices may not be built to last.
"We had a nice run in the market, but it's been speculation mainly driving this, primarily hedge funds and small retail investors," he said. "The crude oil producer has actually been selling into this rally."