Oil Prices Gain on Surprisingly Large Decrease to Gasoline Inventories

After U.S. crude settled below the $40 per barrel level Tuesday for the first time since April 2016, oil prices gained lost ground Wednesday off the back of better than expected gasoline inventory data from the Energy Information Agency (EIA). Stronger than expected U.S. employment data released Wednesday morning from Automatic Data Processing (ADP) lent support to the belief that the Federal Reserve would raise interest rates as early as September, which boosted the dollar, and otherwise pared some of oil’s advances.

The front-month U.S. West Texas Intermediate (WTI) contract settled up 3.3 percent on the NYMEX at $40.83 per barrel, while the Brent front-month contract rose 3.1 percent on the ICE to $43.10 per barrel.

Immediately after the release of the EIA’s closely watched Weekly Petroleum Status Report, oil prices rose more than 2 percent off data that showed a much larger than anticipated draw in U.S. gasoline inventories. For the week ending July 29, the EIA reported a decrease of 3.3 million barrels in gasoline stocks, versus expectations for a decline of 0.3 million barrels. Crude inventories increased by 1.4 million barrels, versus expectations for a draw of 0.9 million barrels, and distillate stocks rose 1.2 million barrels, versus expectations of a decrease of 0.1 million barrels.

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