NEW YORK (Reuters) – Crude prices pared gains Wednesday, pulling off a 2019 high as U.S. government data showed inventories drew down less than an industry report had suggested on Tuesday.
FILE PHOTO: An oil pump is seen operating in the Permian Basin near Midland, Texas, U.S. on May 3, 2017. REUTERS/Ernest Scheyder/File Photo
Brent crude had rallied to its highest this year early in the session, bolstered by an unexpected drop in U.S. crude inventories reported by trade group the American Petroleum Institute late Tuesday.
However, official data from the Energy Information Administration on Wednesday reported a 1.4 million-barrel crude drawdown, about half the API’s reported decline.
“The rally overnight was predicated on a 3 million-barrel per day draw in crude that did not materialize,” said Bob Yawger, director of energy futures at Mizuho in New York. “You’re going to need another catalyst.”
Brent crude futures were up 23 cents at $71.95 by 12:16 p.m. EDT (1616 GMT), having hit an intraday peak of $72.27.
U.S. West Texas Intermediate (WTI) crude futures were at $64.10 per barrel, up 5 cents. The contract earlier touched an intraday high of $64.61 a barrel, just shy of a 2019 high of $64.79 hit last week.
Crude remained supported by steady economic growth in China.
China’s economy grew by 6.4 percent in the first quarter, official data showed, defying expectations for a further slowdown and assuaging global markets as a U.S.-China trade deal also appears near.
Refinery throughput in China – the world’s second-largest crude user – rose 3.2 percent in March from a year earlier.
“The demand side of the equation got a substantial fillip via today’s China data suggesting prices will continue to move higher on improving global growth and risk sentiment,” said Stephen Innes, head of trading at SPI Asset Management.
Prices have been supported this year by a pact reached by the Organization of the Petroleum Exporting Countries and allies, including Russia, to limit their oil output by 1.2 million barrels per day.
Global supply has been tightened further by U.S. sanctions on OPEC members Venezuela and Iran.
Iran’s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.
“Buyers are shying away in view of U.S. policy uncertainty regarding waivers to import Iranian crude oil,” BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.
In June, OPEC and its partners will decide whether to extend their agreement, but Russia’s willingness to stick with the cuts now looks less clear.
Gazprom Neft, the oil arm of Russian gas company Gazprom, expects the global oil deal to end in the first half of the year, a company official said.
“Hints from Moscow to abandon self-imposed supply restrictions have cast a cloud of uncertainty over the OPEC+ production strategy in the second half of 2019,” said Stephen Brennock of oil broker PVM.
Additional reporting by Noah Browning and Jane Chung; Editing by Marguerita Choy and David Evans