Oil ETFs Strengthen on Deeper U.S. Inventory Drawdowns

Crude oil prices and energy-related exchange traded funds jumped as U.S. oil inventories slip to a three-and-a-half year low on rising exports.

On Wednesday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, advanced 1.4% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, increased 0.4%.

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Meanwhile, WTI crude oil futures were 1.4% higher to $70.8 per barrel and Brent crude was up 0.4% to $79.3 per barrel.

The U.S. Energy Information Administration revealed U.S. crude oil inventories declined by 2.1 million barrels last week to 394 million barrels, which was the fifth consecutive weekly drop and marked the lowest total since February 2015, the Wall Street Journal reports.

Current inventory levels were also 142 million barrels less than the record-high 536 million barrels in March 2017.

Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased U.S. crude oil exports, which have been supported by the widening differential between U.S. benchmark WTI prices and the global benchmark, Brent crude.