Despite the previous trading session being awash with bearish sentiment and demand concerns, Wednesday saw oil prices rallying the most in a week due to the U.S. reporting that it had exported a record amount of crude and fuel last week.
West Texas Intermediate climbed $2.59 to settle at $87.91 per barrel and Brent rose $2.17 to $95.69 per barrel after the Energy Information Administration disclosed that total U.S. petroleum exports reached 11.4 million barrels per day (bpd) last week.
The news was enough for traders to ignore a smaller-than-expected 2.59 million barrel build in crude inventories.
Rob Thummel, a portfolio manager at Tortoise Capital Advisors, remarked, "Higher exports, falling gasoline inventories: both of those signal that we're going to need more U.S. oil down the road."
But not all analysts thought Wednesday's price comeback was due to bullish news from the U.S.: the dollar's weakness added support, and Eli Tesfaye, senior market strategist at RJO Futures, argued that "Across the board this is a dollar-denominated move, and if you try to read outside out of that, it's foolish."
Traders were also said to be closely watching the Strategic Petroleum Reserve closely, as the U.S. may soon have to purchase crude to refill its stockpiles after releasing yet more oil to refiners in a questionable bid to lower prices at the pump for motorists.
While the exports caused a boost in commodity prices on Wednesday, critics pointed out that this is occurring at a time when America's East Coast is suffering shortages of both diesel and gasoline.
WoodMackenzie noted that Washington has debated instituting export curbs among other options to bolster supplies and doing so could save consumers $5 billion in gasoline costs – but diesel costs could also be raised by $2 billion to European trading partners and erase $30 billion in earnings from American refiners.
In other oil related news on Wednesday, Washington reportedly is scaling back its plan to impose a cap on Russian oil prices; according to people familiar with the matter, the U.S. and European Union are likely to settle for a more loosely policed cap at a higher price than once envisioned.
The compromise was said to be the result of persistent investor skepticism for the scheme as well as the fact that China and India will not participate given they are the former Soviet Union's most important trading partners.