Oil prices slightly rose after data showed U.S. crude inventories fell yet again last week.
On Wednesday, June 23, the U.S. Energy and Information Administration (EIA) reported crude inventories fell by 4.9 million barrels in the last week, compared to analysts’ expectations of a 1.8 million-barrel decrease. (Source: U.S Energy Information Administration, June 24, 2015.)
The same report noted in the week ending June 19 that U.S. crude oil refinery inputs averaged 16.5 million barrels per day, up by more than 250,000 barrels per day over the previous week. But regardless of the notable weekly drop in inventories, stockpiles are yet at the highest levels for this period of the year in at least 80 years.
The U.S. rotary rig count from Baker Hughes was down by two rigs to 857 for the week of June 19, 2015. This is 1,001 rigs, or nearly 60%, lower than last year. It was also the 28th straight week of a decline. (Source: Bakerhughes.com, last accessed June 24, 2015.)
Following the release, the price for West Texas Intermediate (WTI), a benchmark for U.S. oil markets, was little changed. Crude oil was trading at $61.25—an increase of 0.37% from the previous day.
Today’s report shows U.S. energy producers are starting to cut back production in the face of low oil prices. Shale drillers, who have led America’s recent energy boom, have relatively high costs of operations. Although the oil prices have been recovered from their $40.00 low in January, this report indicates the industry is still struggling.
Analysts expect this trend to continue in the coming weeks. As Americans head into the summer driving season and producers cut back further on production, industry watchers expect inventories to decline further. That could put a firm bid underneath oil prices.