Crude Oil Rallies After Larger-Than-Expected US Supply Withdrawal

Crude oil futures are climbing in the middle of the trading week amid a larger-than-expected withdrawal in domestic inventories. Energy commodities have been garnering momentum in the home stretch of July, but the gains will not be enough to avoid a significant monthly decline.

September West Texas Intermediate (WTI) crude oil futures advanced $2.07, or 2.18%, to $97.11 per barrel at 15:03 GMT on Wednesday on the New York Mercantile Exchange. US crude is poised for a weekly drop of nearly 6%, adding to its monthly slump of 12%. Year-to-date, WTI prices are up 28%.

Brent, the international benchmark for oil prices, topped $100 again. October Brent crude futures rallied $2.21, or 2.22%, to $101.67 a barrel on London’s ICE Futures exchange. Brent prices are down nearly 5% this week and close to 10% on the month. However, year-to-date, Brent has surged more than 30%.

According to the US Energy Information Administration (EIA), domestic crude inventories fell 4.523 million barrels in the week ending July 22, much larger than the market estimate of a 1.037-million-barrel decrease. This was the second consecutive week that the US government reported a drawdown.

Stocks at the Cushing, Oklahoma storage facility rose 751,000 barrels. Gasoline supplies fell 3.304 million barrels, while distillate inventories edged up just 784,000 barrels.

Market analysts have purported that there are far more downside risks for oil prices, especially after hitting their lowest levels since April twice in a week.

“[WTI] quietly broke down through key support at $95.18 on a (electronic) closing basis Friday and that has caused some trend-following and systematic traders to liquidate long positions,” wrote analysts at Sevens Report Research, in a note. “Our technical view of oil has now shifted from cautiously bullish to neutral with rising risks to the downside, especially after WTI closed below that aforementioned support at the March and April double bottom lows ($95.18) for a second time in a week yesterday.”

natural gas prices

All the focus this week has been on Russia as the state-owned Gazprom warned that it would limit natural gas flows to Europe. This sent the energy commodity soaring on Tuesday.

September natural gas futures took a breather, falling $0.294, or 3.33%, to $8.531 per million British thermal units (Btu). But it is up about 120% year-to-date.

In other energy commodities, September gasoline futures rose $0.0785, or 2.55%, top $3.1612 per gallon. September heating oil futures advanced $0.1070, or 3.04%, to $3.6325 a gallon.

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