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US Crude Nears $70 As Domestic Inventories Post Bigger-Than-Expected Decline

August 29, 2018 at 16:40 by Andrew Moran

Crude oil futures are on track for their best finish in more than a month on Wednesday after the US government reported a bigger-than-expected decline in domestic supplies. Investors might take the profits soon with driving season coming to an end and maintenance refinery on the horizon.

October West Texas Intermediate (WTI) crude oil futures tacked on $0.77, or 1.12%, to $69.30 per barrel at 16:19 GMT on Wednesday on the New York Mercantile Exchange. Year-to-date, US crude prices are up more than 18%, or 41% over the last 12 months.

Brent, the international benchmark for oil prices, is heading in the other direction. September Brent crude oil futures shed $0.29, or 0.4%, to $72.61 a barrel on London’s ICE Futures exchange.

Both contracts are poised for their highest settlements in August.

According to the US Energy Information Administration (EIA), US crude inventories declined 2.6 million barrels for the week ending August 24, which is higher than the market forecast of one million barrels. US crude output topped 11 million barrels per day (bpd) again. Gasoline stockpiles slipped 1.6 million barrels, while distillate supplies fell 800,000 barrels.

The Baker Hughes total rig count stood at 1,044, down 13 from a week ago.

Analysts are warning that there are several factors that could contribute to oil’s projected tumble.

The US dollar weakened again midweek, slipping 0.1% to 94.63. A lower buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase. The market may think that this is a temporary slide.

The bull market could hit the pause button in the coming weeks. In addition to traders taking advantage of a falling dollar, investors are anticipating the upcoming refinery maintenance season. Also, the US driving season is coming to an end. All of these are factors that could prompt crude prices to pare their recent string of gains.

In other energy markets, October natural gas futures were flat at $2.848 per million British thermal units (btu). October gasoline futures rose $0.02, or 1.08%, to $1.996 per gallon. October heating oil futures edged up $0.025, or 1.13%, to $2.242 a gallon.

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