By Nicole Friedman
NEW YORK--Oil prices rose Wednesday on unexpected declines in
U.S. crude-oil supplies and production.
Prices have slumped this month on renewed fears that the global
glut of crude oil could last longer than investors initially
expected. This comes as production in the U.S. and elsewhere
continues to exceed consumption.
Wednesday's data offered some hints that the oversupply of crude
oil is starting to shrink, but analysts warned that the trend might
not continue and prices could resume their decline.
Light, sweet crude for September delivery settled up 81 cents,
or 1.7%, to $48.79 a barrel on the New York Mercantile Exchange.
Brent, the global benchmark, rose 8 cents, or 0.2%, to $53.38 a
barrel on ICE Futures Europe.
Domestic crude inventories fell by 4.2 million barrels to 459.7
million barrels last week, the U.S. Energy Information
Administration said Wednesday. Analysts surveyed by The Wall Street
Journal expected stockpiles to be unchanged in the week.
Though refineries processed less crude into gasoline and other
fuels compared with the week before, crude-oil inventories still
declined due to a drop in imports and production.
U.S. crude-oil production fell by 145,000 barrels a day to 9.4
million barrels a day, the largest one-week decline since October
2013. Excluding Alaska, which saw a small rise in output, the drop
totaled 151,000 barrels a day.
"The most interesting thing is the pretty big adjustment
downward in crude production," said Dominick Chirichella, analyst
at the Energy Management Institute. "In general, I think it's an
overall positive report."
The EIA's weekly production figures are based on a statistical
model, not reported production.
Prices erased some of their gains late in the trading session as
the dollar strengthened on signals from the Federal Reserve that
U.S. short-term interest rates could rise in the coming months. A
stronger dollar can weigh on crude prices by making the
dollar-priced commodity more expensive for foreign buyers.
Gasoline stockpiles fell by 400,000 barrels. Analysts had
expected gasoline supplies to be unchanged. Gasoline futures rose
1.92 cents, or 1.1%, to $1.8224 a gallon.
Diesel supplies rose by 2.6 million barrels, more than the
1.3-million-barrel increase that analysts had expected. Diesel
futures fell 0.61 cent, or 0.4%, to $1.5983 a gallon.
Write to Nicole Friedman at nicole.friedman@wsj.com