Talk about a volte-face.
Oil prices turned positive on Wednesday, looking to post their first daily gain in three, as investors took their cue from an unexpected drop in gasoline stocks and ignored the headline number in the latest US crude stockpile report.
West Texas Intermediate, the US crude benchmark, which was down 0.8 per cent to $51.74 a barrel, ahead of the release, was up 0.8 per cent to $52.56 a barrel at pixel time.
Meanwhile, Brent crude, the global oil standard, which declined 0.6 per cent to $54.71 a barrel, prior to the report, was trading 1 per cent higher at $55.58 a barrel.
The moves came as inventories of gasoline, the stuff that crude is refined into fell by 869,000 barrels, the first decline in six weeks, compared with expectations of a 1.1m barrel build, according to the Energy Information Administration.
The crack spread between gasoline and crude oil prices is at 12 per cent, Robert Yawger at Mizuho Securities, said, noting that there was “no way it can rally that much without dragging [US crude] along for the ride.”
He added: “Gasoline storage was a draw versus a build in the API…the draw kept gasoline from posting all-time record storage number …and four week gasoline demand was up over 1 per cent.”
Moreover, while the 13.8m barrel increase in US crude stocks was larger than expected, it was narrower than the 14.2m rise in US crude supplies that the API, an industry group, had pointed to on Tuesday.