Investing.com — futures surged on Wednesday resuming its push back to $50 a barrel, amid a sharp, unexpected draw in inventories last week and indications that Saudi Arabia could cut production at the end of the summer.
On the New York Mercantile Exchange, WTI crude for September delivery traded in a broad range between $47.40 and $40. 50 a barrel before closing at $48.75, up 0.77 or 1.59%. At one point, Texas Long Sweet futures soared nearly 3% for the session before paring some of the gains in U.S. afternoon trading.
On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $52.52 and $54.30 a barrel before settling at $53.36, up 0.06 or 0.11%. Meanwhile, the spread between the international benchmark of crude stood at $4.61, below Tuesday’s level of $5.35 at the close.
The U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status report on Wednesday that U.S. crude stockpiles fell by 4.203 million barrels, below expectations for a 1.88 million draw. A week earlier, EIA reported that U.S. crude stockpiles unexpectedly rose by 2.5 million barrels for the week ending on July 17, pushing inventory levels nationwide to 463.9 million.
Following last week’s draw, U.S. crude oil inventories still remain near levels not seen for this time of year in at least the last 80 years.
Also on Wednesday, the Wall Street Journal reported that Saudi Arabia could slash crude output by 200,000 to 300,000 barrels a day, to roughly 10.3 million bpd as early as September. In June, the kingdom produced more than 10.5 million barrels a day, amounting to its highest level on record.
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Last November, the Organization of the Petroleum Exporting Countries triggered a protracted battle for global market share when it decided to keep its production ceiling unchanged at 30 million barrels per day. Many industry observers believe the strategic decision was aimed at undercutting U.S. shale producers, which can drill more efficiently when crude prices are higher. As both powers have flooded the market with a glut of oil, crude futures have fallen by roughly 40%.
The , which measures the strength of the greenback versus a basket of six other major currencies, surged to an intraday high of 97.15, up 0.35%, after the Fed announcement.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
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