Oil Futures Hold Mild Gain After Inventory Decline

Benchmark U.S. crude-oil futures clung to a thin advance Wednesday after weekly crude stockpile levels posted a bigger drawdown than had been anticipated.

Crude oil for September delivery CLU3 +0.20%  was up 5 cents, or 0.1%, at $105.35 a barrel, paring earlier gains.

Prices had turned higher after the close of trade on the New York Mercantile Exchange, following the American Petroleum Institute’s report that crude stockpiles dropped 3.7 million barrels in the week ended Aug. 2, according to reports.

That was more than the decline of 2 million barrels that analysts polled by Platts had forecast.

Investors, looking for signals on energy supply, will comb through the U.S. Energy Information Administration ‘s own inventory report, due at 8:30 a.m. Eastern time.

The API also said distillate stocks increased by 1.5 million barrels, while gasoline stocks decreased by 971,000 barrels. Analysts had expected inventory for each to decline by 1 million barrels.

Oil futures on Tuesday had lost $1.26, or 1.2%, in Nymex trade, keying off of sharp losses on Wall Street after two Federal Reserve officials separately indicated that the central bank appears ready to start reducing the amount of bond purchases this year.

Crude prices have fallen 1.5% so far this week.

U.S. crude has dropped “into the lower half of a $103-to-$109 trading channel,” CMC Markets senior market analysts Colin Cieszynski told clients late Tuesday.

“The formation of a head-and-shoulders top in the relative strength index represents a rare but bearish potential signal, which combined with a double top suggests price at risk here,” Cieszynski wrote.

Energy and equity investors will hear more talk about potential tapering of monetary stimulus when Philadelphia Fed President Charles Plosser and Cleveland Fed President Sandra Pianalto speak later Wednesday.

Meanwhile, September Brent crude UK:LCOU3 -0.33% fell 24 cents, or 0.2%, to $107.94 a barrel on ICE Futures ahead of the June industrial production report from Germany.

September gasoline RBU3 +0.03%  shed 1 cent, 0.1%, to $2.91 a gallon, and September heating oil HOU3 -0.28%   lost 1 cent, or 0.2%, to $3 a gallon.

Natural gas for September delivery NGU13 -0.12%   lost 2 cents, or 0.6%, to $3.30 per million British thermal units.

Source: Market Watch