Investing.com – Oil prices gave back much of their early gains on Wednesday after analysts suggested that a weekly U.S. crude stockpile draw that came in almost three times the level forecast was distorted by production shutdowns forced by Hurricane Barry.
New York-traded WTI futures were off 18 cents, or 0.3%, at $56.59 per barrel by 1:55 PM ET (17:55 GMT). It rose to as high as $57.64 earlier.
London-traded , the benchmark for oil outside of the U.S., was down 13 cents, or 0.2%, to $63.70. The session high was $64.66.
The U.S. Energy Information Administration said crude inventories fell by 10.84 million barrels for the week to July 19, versus a forecast draw of 4 million barrels.
Oil prices initially jumped in acknowledgement of the sixth-straight weekly draw in that drained nearly 40 million barrels from inventories during the period. But the market later came off its session highs as more traders linked the numbers to potential anomalies from Hurricane Barry.
The storm shut down more than half of the regular oil production on the U.S. Gulf of Mexico for at least two days before making its landfall on the central Louisiana coast on July 13.
“Hurricane Barry has shaken up the data for a second week with lower production and stymied imports leading to a near-11 million barrel draw,” said Matthew Smith, analyst at New York-based crude cargoes tracker Clipperdata.
“Obviously, the effects of Hurricane Barry drove the decline and the plunge in U.S. production on the week,” agreed John Kilduff, founding partner of New York energy hedge fund Again Capital.
The EIA also reported that gasoline inventories decreased by 226,000 barrels, compared to expectations for a draw of 730,000 barrels. Distillate stockpiles rose by 613,00 barrels, compared to forecasts for a drop of 499,000 barrels.
While Smith and Kilduff found the continued draws in gasoline and distillates positive, Tariq Zahir, managing member of investment-advisory firm Tyche Capital, said the drop didn’t make sense.
“Usually at this time of year, we see larger draws in gasoline,” Zahir said, suggesting there’s some demand weakness for gasoline.
“As we go through the next few days and weeks, the face-to-face (trade) talks in China will, in our opinion, have an impact on the energy complex,” Zahir said. “If the talks go well, we could see crude catch a bid. Otherwise, we could tank again.”