By Barani Krishnan
Investing.com - The EIA has given oil bulls what China couldn't.
Dashed expectations for a U.S.-China trade deal after President Donald Trump's threatening tweet on more tariffs for Beijing wore crude futures down for two-straight sessions. But the EIA helped crude longs on Wednesday with an overwhelmingly bullish data set.
West Texas Intermediate futures, the benchmark for U.S. crude, settled up 72 cents, or 1.2%, at $62.12 per barrel. WTI finished the previous session at $61.40, the lowest settlement since March 29.
London Brent futures, the global benchmark for oil, settled up 49 cents, or 0.7%, at $70.37 a barrel, after a 2% tumble Tuesday.
Oil's gains were capped by a sluggish Wall Street, which had trouble finding direction on worries that a breakdown in trade talks between the world's top two economies will drag global growth lower. China's top trade negotiator, Vice Premier Liu He, was due to visit Washington on Thursday and Friday and will likely try to prevent Washington from raising tariffs to 25% from 10% on $200 billion of Chinese imports.
The EIA said in its regular weekly report that crude oil inventories slumped by nearly 4 million barrels in the week to May 3, versus forecasts for a build of 1.2 million barrels. Crude stockpiles had risen by a net of nearly 30 million barrels in five earlier weeks, and oil bears had expected the trend to continue.
"The fall in crude oil inventories also came despite lowered refinery operating rates," John Kilduff, founding partner at New York energy hedge fund Again Capital, said.
"Another bullish element was the very high demand for gasoline, which rivals peak summer driving season levels," Kilduff said. "Exports of crude oil fell, but remain at robust levels."
Refineries operated at 88.9% of capacity last week, just under the 90% threshold that's common in the run-up to summer when driving and gasoline demand is at its peak.
Gasoline inventories fell by about 600,000 barrels last week against expectations for a 430,000-barrel draw.
Distillate stockpiles decreased by 160,000 barrels, compared to forecasts for a decline of 1.1 million.
Adding to the upbeat sentiment was a drop in U.S. crude production as a whole from record highs of 12.3 million barrels per day in the previous week to 12.2 million bpd.
Crude imports fell by 432,000 barrels to 4.37 million, demonstrating again the squeeze applied on the market by Saudi Arabia and others in OPEC who are selling their production only to the highest-bidding U.S. refineries.
The only negatives that mattered in the EIA report were stockpiles at the Cushing, Okla., storage hub for WTI, which rose by 821,000 barrels versus the previous week's 265,000 and a 289,000-barrel slide in U.S. crude exports to 2.3 million, which correlated with the Cushing build.