Oil Prices dropped on Wednesday after two days of gains despite U.S. crude stocks falling more sharply than expected. Traders used the weekly inventory figures as an explanation to pull back from the recent rally. Both Brent and U.S. futures contracts reached their highest levels since mid-March in intraday trade before retreating.
The $70-per-barrel mark has acted as a barrier for the market since March, with investors unwilling to push Oil Prices higher as coronavirus infections surge in parts of the world. Brent crude dropped 5 cents to $68.83 a barrel. U.S. West Texas Intermediate crude settled 6 cents, or 0.09%, lower at $65.63 per barrel.
The Energy Information Administration said that U.S. crude inventories fell by 8 million barrels in the week to April 30 to 485.1 million barrels, exceeding expectations for a 2.3 million barrel drop. Exports rose to 4.1 million barrels per day which is the most since March of last year, and refining output was at its highest since that month as well. Pandemic-related restrictions in the United States and parts of Europe are lowering, but infections are still on the rise in India and Japan.
Matt Smith, director of commodity research at ClipperData said that refining activity should only increase from here on out, while Asian demand is set to bolster U.S. oil exports going forward. Eurozone business activity accelerated last month as the bloc’s dominant services industry shrugged off renewed lockdowns and returned to growth.India is the world’s third-largest oil consumer and is combatting a surge in COVID-19 infections. The country’s oil imports in March rose from the earlier month, buoyed by an upturn in economic activity, but are expected to drop again because of renewed lockdowns.