Futures climbed 2.3 percent as inventories fell 4.7 million barrels to 378.2 million last week, more than three times the decline forecast in a Bloomberg survey of analysts. Refineries operated at 92.7 percent of capacity, the highest rate since July 2007.
“The 4.7 million-barrel drop in crude stocks was a big shock, which pushed the market higher,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant.
Oil for August delivery advanced $1.90 to settle at $85.81 a barrel on the New York Mercantile Exchange. Prices are down 13 percent this year.
Brent oil for August climbed $2.26, or 2.3 percent, to settle at $100.23 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate crude, the grade traded in New York, widened to $14.42 from $14.06 yesterday.
Crude oil stockpiles at Cushing, Oklahoma, the delivery point for WTI, declined 859,000 barrels to 46.8 million last week, the biggest percentage drop since January.
Refinery utilization has climbed 8.9 percentage points in the last three months as the profit from making fuel has gained. The margin as expressed by the so-called crack spread rose to $31.08 a barrel yesterday, the highest level since April 16. The profit to process three barrels of oil into two of gasoline and one of heating oil slipped to $30.38 based on today’s settlement prices.
“When refineries are operating at high rates, it’s pretty natural that crude stocks will post a big decline and there will be a build in product supplies,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.
Gasoline stockpiles rose 2.75 million barrels to 207.7 million, more than five times the gain of 500,000 barrels projected in the Bloomberg survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 3.11 million barrels to 120.9 million. A 625,000-barrel increase was projected.
“The large gain in product stocks is taking a bite out of the gain you would usually expect when there’s such a big drop in crude inventories,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The product supply number points to weak fundamentals.”
Total fuel use dropped 1.1 percent to 19 million barrels a day in the four weeks ended July 6, the biggest decline since February. Gasoline consumption fell 0.6 percent to 8.87 million barrels a day during the same period, leaving demand 3.9 percent lower than a year earlier.
“The demand numbers are anemic and it’s important to remember that crude stocks are barely off their 22-year highs,” McGillian said.
U.S. crude oil inventories increased to 387.3 million barrels in June, the highest level since 1990.
Oil prices retreated from the day’s highs after Federal Reserve minutes showed a few policy makers believe further action will be needed to boost the labor market, disappointing investors looking for a stronger signal of more stimulus.
The minutes of the Federal Open Market Committee’s June 19-20 gathering showed that two participants said more bond purchases are appropriate and two others said they would be warranted in the absence of “satisfactory progress” in cutting unemployment or if risks increase.
“The Fed minutes were somewhat tepid,” Schenker said. “They show that the FOMC is pretty split and that the bar for further stimulus is pretty high.”
New York futures have technical support along the middle Bollinger Band on the daily chart, around $83.40 a barrel today, according to data compiled by Bloomberg. Futures rebounded yesterday after trading near that indicator. Buy orders tend to be clustered close to chart-support levels.
Electronic trading volume on the Nymex was 460,575 contracts as of 3:46 p.m. in New York. Volume totaled 513,775 contracts yesterday, 9.5 percent below the three-month average. Open interest was 1.41 million.