West Texas Intermediate crude oil held onto gains on Thursday after a report showed that oil inventory build in the U.S. was much lower than expected.
WTI crude for April gained 2.15%, or 115 cents, to trade at $54.75 per barrel.
The weekly report from the U.S. Energy Information Administration showed that crude oil inventories increased by 0.564 billion barrels. A report from the American Petroleum Institute earlier in the week showed a supply draw of 0.884 million barrels.
Stockpiles in Cushing, Oklahoma, the primary delivery point for Nymex crude oil, fell by 1.528 million barrels last week. In total, the EIA said crude inventories in the U.S. came in at 518.7 million barrels, which was in the “upper limit of the average range for this time of year.”
The EIA’s report also showed a decline in gasoline inventories by 2.628 million barrels. Analysts were forecasting a decline of 0.888 million barrels.
Distillate supplies dropped by 4.924 million barrels, surpassing expectations of decline of 0.483 million barrels.
Brent oil on the ICE Futures Exchange traded up 1.72%, or 96 cents, to $56.80 per barrel. Brent oil was trading at $57.05 before the news.
Drilling activity in the U.S. has increased by 7% since 2016, nearing 2014 levels when crude output in the U.S. contributed to the collapse in oil prices.
OPEC and non-OPEC producers came to an agreement last year to curb output in an effort to reduce the oversupply. OPEC members have remained in compliance with the agreement. New data shows that the group’s production fell by 890,000 barrels a day from 32.14 million barrels per day the previous month. The decline indicates that members are 90% compliant with the agreed-upon output cut.
But increased drilling activity is raising concerns that shale production may undermine OPEC and non-OPEC producers’ efforts to reduce the global oversupply that caused the oil price collapse.
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