Stockpiles Lurch Backward, Oil Prices Leap

Oil prices vaulted on Wednesday after data showed a decline in U.S. stockpiles as refineries hiked output.

Brent crude was up 83 cents, or 1.6% at $52.48 U.S. per barrel mid-morning Wednesday. U.S. West Texas Intermediate WTI crude rose 78 cents, or 1.6%, to $49.44 U.S.

The U.S. Energy Information Agency (EIA) reported that U.S. commercial crude stockpiles fell by 1.8 million barrels to 520.8 million in the week through May 12. Analysts surveyed had estimated a draw in the stockpiles of 2.4 million barrels.

Both benchmark prices started the day in negative territory after data from the American Petroleum Institute estimated that U.S. crude stocks had risen by 882,000 barrels.

Gasoline stocks fell by 413,000 barrels, compared with analysts' expectations for a 731,000-barrel drop. EIA information showed distillate stockpiles, which include diesel and heating oil, were down by 1.9 million barrels, versus expectations for a 1.1-million-barrel decline.

Supply cuts of 1.8 million barrels per day (bpd) were initially agreed to run during the first half of 2017. Riyadh and Moscow say they should be extended until March. An extension is due to be discussed at a meeting of ministers of the Organization of the Petroleum Exporting Countries on May 25.

The International Energy Agency said on Tuesday commercial oil inventories in industrialized countries rose 24.1 million barrels in the first quarter of 2016. Trade sources and shipping data indicated a rising number of tankers storing oil offshore China because facilities on land are full.