Oil prices were in the green slightly Wednesday as the U.S. Energy Information Administration reported a 3.3 million barrel draw in domestic crude inventories. The Street was expecting a 3.3 million drawdown in U.S. stockpiles this week. It was the eighth consecutive weekly stockpile drawdown.
At 463.2 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year, the EIA said.
On Tuesday, the American Petroleum Institute reported a 3.6 million barrel reduction in oil inventories and said China's July crude imports rose 12% year-over-year, a bullish signal for demand. The API reported an unexpected 1.4 million barrel increase in gasoline stockpiles, however.
"These crude draws are primarily supported by continued high refinery margins -- U.S. refinery utilization was above 95% last week," said Jeff Quigley, director of energy markets at consulting and analytics firm Stratas Advisors. "Demand expectations have improved over the last several weeks. U.S. demand has moderated, but demand for product in key markets remains strong, supporting exports."
Following the EIA's 10:30 a.m. report, West Texas Intermediate crude contracts for October delivery jumped up slightly in there first day of trading to breach $48 per barrel, while global benchmark Brent crude contracts for October delivery hovered just above $52 a barrel.
Meanwhile, natural gas futures on the New York Mercantile Exchange pared some of their earlier losses Wednesday as tropical storm Kenneth was weakening in the Pacific and tropical storm Harvey became less powerful as it headed into the Gulf of Mexico, according to a Wednesday note from Seaport Global Securities.
The EIA reported Wednesday that U.S. crude oil imports averaged 8.8 million barrels per day last week, up by 664,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged over 8.2 million barrels per day, 3.1% below the same four-week period last year.
U.S. supply continues to grow, as well, EIA data showed. The agency said total products supplied over the past four weeks averaged over 21 million barrels
per day, up by 1.4% from the same period last year.
"Crude exports also remain strong and are likely to stay strong as the Brent/WTI differential remains wide, helping to support continued inventory drawdowns," Quigley told TheStreet on Wednesday. "One key concern remains how much of an impact the re-routing of OPEC barrels to Asia (primarily by the Saudis) is having on manipulating inventory levels in the U.S. However, crude inventories are drawing across the entire OECD."
The oil industry's next major datapoint comes Friday with Baker Hughes' (BHGE - Get Report) weekly rig count. On Aug. 18, Baker Hughes reported a 5-unit drop in active drilling rigs for the previous week.
"U.S. production continues to increase but the increase remains moderate," Quigley opined. "The fall in rigs reported Friday is obviously bullish."