WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange rallied in afternoon trade Wednesday on supportive inventory data. An EIA report detailed a smaller-than-expected build in U.S. commercial crude oil inventories and sizable increase in refinery run rates during the week of Nov. 15, improving near-term market outlook for crude demand.
Oil futures posted across-the-board gains on Wednesday, recouping all the declines from the two prior sessions after government data reported domestic crude supply increased by 1.4 million barrels (bbl), far below earlier estimates of a 5.9 million bbl build from the American Petroleum Institute. The build in commercial crude stocks in the United States coincided with the seventh consecutive drawdown from the Strategic Petroleum Reserve (SPR), down 1.972 million bbl last week for a total 7.290 million bbl draw since early October, with emergency reserves at the lowest level since December 2003. Absent the transfer from emergency stocks to commercial, the EIA would have shown a modest stock draw in non-SPR inventory.
The agency also reported a sizable rebound in U.S. crude oil exports, up 394,000 barrels per day (bpd) last week to 3.027 million bpd, roughly 35% higher than the same week in 2018.
Refined products data was somewhat mixed, detailing a seventh consecutive draw in distillate fuels, but a second weekly build in gasoline supply as demand eased. Domestic refiners ramped up operational capacity to 89.5% last week, as they exit fall maintenance programs.
Separately, the U.S. Federal Reserve on Wednesday issued minutes of the Oct. 29-30 Federal Open Market Committee meeting, where the central bank lowered interest rates by 0.25% to the target range of 1.50% to 1.75%. Minutes showed that "most" members believed the third cut in a row this year was enough "to support the outlook of moderate growth, a strong labor market, and inflation near the committee's symmetric 2% objective." Fed Chairman Jerome Powell earlier indicated the U.S. economy was stable without immediate downside risks and the pause in reducing the key federal funds rate is likely to remain in place. The U.S. economy has cooled off from 3.1% growth rate in the third quarter to 1.9% from July to September, while consumer spending remained strong and the labor market continues to produce more jobs than expected.
NYMEX West Texas Intermediate December futures expired at $57.11 bbl, gaining $1.90 on the session, while the January WTI contract settled $1.66 higher at $57.01 bbl.
ICE January Brent futures surged $1.49 to a $62.40/bbl settlement. December ULSD futures ended the session 3.47 cents higher at $1.8921/gallon, reversing off a 2-1/2 month low at $1.8468 on the spot continuous chart. December RBOB futures spiked 5.26 cents to settle at $1.6563/gallon, bouncing off a $1.5868 six-week low on the spot continuous chart.
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