Oil turns positive as U.S. crude inventories fall by 2.3m barrels – EIA

Oil Production

Oil prices turned positive after earlier falling to a two-month low on Wednesday as government data showed a ninth consecutive decline in crude stockpiles.

U.S. commercial crude stockpiles fell by 2.3 million barrels to a total of 519.5 million barrels, the Energy Information Administration reported.

The report matched an earlier assessment from industry group the American Petroleum Institute.

The EIA and API data were just above a 2.1 million-barrels draw forecast in a Reuter’s poll.

Meanwhile, gasoline stocks rose by 911,000 barrels, compared with the Reuters poll forecast for no change.

Distillate stockpiles, which include diesel and heating oil, fell by 214,000 barrels, versus expectations for a 600,000-barrel increase, the EIA data showed.

Brent crude was up 30 cents at $46.96 a barrel by 10:48 a.m.

On Tuesday, the contract settled down 30 cents, or 0.6 percent, at $46.66 barrel.

U.S. West Texas Intermediate (WTI) crude was up 16 cents at $44.81 a barrel, having earlier fallen to $43.69, its lowest intraday level since May 10.

The August contract expires at the close of trade. The contract for September delivery was up 17 cents at $45.62.

The dollar index extended gains on Wednesday, as strong U.S. data and rising expectations that the Bank of Japan will muster additional easing steps sent the dollar index to four-month highs.

A strong dollar makes greenback-denominated crude more expensive to holders of other currencies and discourages buying.

Russia’s energy minister added to the bearish impetus as he dashed any hope that the world’s biggest oil producers could coordinate on output to stem global oversupply.

He told Reuters in an interview that Russia was not discussing coordination with OPEC and that Russian oil output would rise to 542-544 million tons this year, a 30-year high.

Adding to the sense of oversupply for oil products, China’s June gasoline output rose 8.7 percent from a year ago to 11 million tons, or about 3.1 million barrels per day, the Statistics Bureau said on Wednesday.

Diesel output last month fell 4.5 percent from a year ago, while kerosene supply shot up 10.5 percent, the bureau said.

Liquefied petroleum gas, used mainly in cooking and sometimes for petrochemical feedstock, rose 18.9 percent and naphtha production, mainly used for petrochemicals, climbed 15.7 percent from a year ago.