Oil prices soared Wednesday morning, June 10, after data showed U.S. crude inventories fell last week by the most since July 2014.
On Wednesday, the U.S. Energy and Information Administration (EIA) reported crude inventories fell by 6.8 million barrels in the last week, compared to analysts’ expectations of a 1.7-million-barrel decrease. (Source: U.S Energy Information Administration, June 10, 2015.)
The EIA also noted oil refiners are bumping up demand. In the same report for the week ending June 5, U.S. crude oil refinery inputs averaged 16.6 million barrels per day, up by more than 169,000 barrels per day over the previous week.
The news suggests U.S. oil production growth was leveling off after several years of sharp growth. Following the release, the price for West Texas Intermediate (WTI), a benchmark for U.S. oil markets, increased $1.37 per barrel to $61.28 in morning trading. Brent crude, a barometer for international energy markets, rose $1.48 to a two-week high of $66.36 per barrel.
While higher energy prices are welcomed news for the oil patch, the announcement may not be enough to save the embattled energy sector. U.S. crude inventories remain near levels not seen for this time of year in the last 80 years at least. Without significantly higher oil prices, America’s energy boom could come to an end.
The EIA sees no turnaround anytime soon. In a separate report on Tuesday, the agency forecasted U.S. oil output will drop by 160,000 barrels per day (bpd) next year, compared to a previous forecast of a rise. By their estimates, growth in U.S. oil production will not resume until next year. (Source: U.S. Energy Information Administration, last accessed June 10, 2015.)
“Oil prices still trade more than 40% below their peak of around $106 in June of last year.” EIA administrator Adam Sieminski said in a statement. “Production still is expected to decline in the second half of this year,” he concluded.
Also Read: Have Crude Oil Prices Bottomed?