By Barani Krishnan
NEW YORK (Reuters) – Oil prices hit 2015 peaks on Wednesday amid the first drawdown in U.S. crude inventories since January, before settling off their highs as investors and traders moved to take profits on a multi-week rally.
The dollar’s <.DXY> tumble had also fed the run-up in oil and other commodities, as those raw materials became more affordable for holders of the euro and other currencies. [FRX/]
U.S. crude futures <CLc1> rallied more than $2 to the year’s high of $62.58 a barrel, before settling just 53 cents higher at $60.93.
Futures of North Sea Brent <LCOc1>, the more widely-used benchmark, reached a 2015 peak of $69.63 before turning negative at one point. It settled up 25 cents at $67.77.
U.S. gasoline <RBc1> and heating oil <HOc1> futures also hit their highs for the year, before gasoline closed more than 1 percent lower.
U.S. crude prices have risen every week since March 13, while Brent has seen weekly gains since April 3.
Wednesday’s rise came after the U.S. Energy Information Administration said crude stockpiles fell 3.9 million barrels last week, the first drop in four months.
The draw was more than double that projected by industry group American Petroleum Institute. A Reuters poll of analysts had estimated U.S. crude stocks to rise last week for a record 17th week in a row. [EIA/S] [API/S]
The EIA data lent conviction to oil bulls’ bets that the global oversupply in crude could finally be easing.
But skeptics said more work was needed to balance the market, which they said was overpriced after Brent’s 21 percent rally in April and U.S. crude’s 25 percent gain. Crude prices fell by more than 50 percent between June and January on worries of an oil glut.
“We have come up a long way in a short time,” said John Kilduff, partner at New York energy hedge fund Again Capital, referring to the rally of recent weeks. “People will ultimately realize that prices above $60 a barrel are going to reopen lots of idled oil rigs, meaning more supply.”
Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, noted that while last week’s U.S. crude draw was bullish, there had been builds before for 16 straight weeks that had left more than 485 million barrels in storage.
“I’m not a big buyer of the idea that the fundamental picture has changed as yet. And the market continues to go higher as much as I feel it’s overextended, and it doesn’t look like the run up is over yet.”
(Additional reporting by Himanshu Ojha in London Jacob Gronholt-Pedersen and Jessica Jaganathan in Singapore; Editing by Ruth Pitchford, David Evans, Chris Reese and Marguerita Choy)