Oil benefits from surprise drawdown in USA crude stocks

WTI Crude Oil

Weekly May WTI Crude Oil

Crude oil futures slipped Wednesday despite confirming a drop in United States oil supplies.

Crude oil prices are under pressure early Wednesday on expectations for a build-up in US crude inventories.

United States crude inventories fell by 4.6-million barrels last week, compared with analysts' expectations for an increase of 246,000 barrels, Energy Information Administration data showed on Wednesday.

ADP said employment surged up by 241,000 jobs in March after jumping by an upwardly revised 246,000 jobs in February.

"Supported by a 4.617 million barrel weekly crude oil draw across the US, a solid upturn in equities encouraged buyers in WTI", said Anthony Headrick, energy market analyst and commodity futures broker at CHS Hedging LLC in Inver Grove Heights, Minnesota.

The West Texas Intermediate for May delivery dropped 1.93 US dollars to settle at 63.01 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery lost 1.70 dollars to close at 67.64 dollars a barrel on the London ICE Futures Exchange.

Brent crude, the global oil benchmark, rose 0.6% to $69.74 a barrel on London's ICE Futures exchange.

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The stock has actually grown in the past week, as the company has gathered a 1.81% return in the past 5 trading days. Investors may be watching for the earnings expectations in coming days; how much it could deliver earnings ability.

OPEC and its allies are collectively curbing 1.8 million barrels per day of crude output to help eliminate a global oil glut. Traders were looking for a draw of 1.26 million barrels.

Global markets from equities to oil recovered after investor optimism grew that the US and China will step back from the brink of a trade war.

Prices last week rose to a recent high of $71 per barrel, before crashing by 4% early this week and staging a partial recovery on Wednesday.

The price of oil has been stuck between the rise in US shale and a deal from the Organization of the Petroleum Exporting Countries' and Russian Federation to curb production and end a global supply glut.

Oil prices have also been supported recently by OPEC's reduced production which has fallen to an 11-month low due to the production cut agreements and production problems in Libya and Venezuela.

The decline in prices was offset by a fall in USA production last week, which eased investor concern of a supply glut. Though Baker Hughes last Friday reported a lower rig count, which had a positive effect on prices, the fluctuations in the rig count don't have a lot to do with well productivity these days.

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