On Wednesday, oil’s multi-day rally cracked as players weighed up the market following an unexpected drawdown in U.S. crude and gasoline inventories was offset by concerns Saudi Arabia was increasing output to record highs even as OPEC talked of ways to ease the glut. The U.S. West Texas Intermediate (WTI) crude futures fell $0.21 at $46.37 a barrel early Wednesday afternoon. It had increased as much as $0.21 previously. Brent crude futures LCOc1 increased 22 cents to $49.45 a barrel. It reached five-week highs of $49.75 earlier.
Oil prices increased after the U.S. Energy Information Administration stated domestic crude inventories dropped 2.5 million barrels last week, surprising analysts who had anticipated a build of 522,000 barrels. Gasoline stockpiles also declined 2.7 million barrels, more than projected for a 1.6 million-barrel drop, the EIA data displayed.
The rally soon faded as the market focused more on a report that said Saudi Arabia could ramp crude output in August to 10.8-10.9 million bpd, overhauling Russia’s production, even as OPEC aims for a pact to curb global output. Oil has rebounded about 11 percent over the past four sessions since Saudi Arabia, the leader in the Organization of the Petroleum Exporting Countries, raised speculation the group was ready to reach an output freeze agreement with non-OPEC producers. The Saudis reported to the OPEC they pumped 10.67 million bpd in July, versus their previous record of 10.56 million in June 2015.