The American Petroleum Institute (API) reported a draw of 4.62 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a draw of only 3.5 million barrels for the week ending June 2.
This week's draw, according to the API, is the seventh week of draws in the last 10 weeks, with a total draw of almost 27 million over the last ten weeks.
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Oil markets have been, for the last couple of weeks, cautious and slow to react to the positive news of crude oil inventory draws. This week, the news comes on the back of uneasiness in the oil market as Saudi Arabia and a few other Arab nations-which include OPEC members UAE and Libya-severed diplomatic ties with LNG heavyweight Qatar, citing that the country had sponsored terrorism and destabilizing the region.
While analysts predict that the action taken by the Arab nations against Qatar will have little effect on the oil industry as it was unlikely to disrupt the status quo of the oil production cuts of which Qatar is a part of, it has created logistical concerns, and there are reports that LNG buyers are changing shipping plans to avoid the blacklisted country. Still, WTI barrel prices failed to go much beyond $48.
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WTI was trading at $48.10 at 2:30pm EST, up 1.48 percent on the day-with Brent trading at $50.05 per barrel, or 1.17 percent up since open. Both benchmarks are below last week's levels.
The upward movement on gasoline inventories was a disappointment, climbing 4.08 million barrels this week, according to the API.
Distillate inventories also rose this week by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.
By 4:36pm EST, both WTI and Brent Crude were trading up on the news at $48.36 and $50.27 respectively.
The U.S. Energy Information Administration report on oil inventories is due this week on Wednesday at 10:30 a.m. EDT.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More