The u.s. Energy Department's inventory release showed that crude stockpiles declined for the eighth straight week, continuing to drag down the overall surplus. Moreover, gasoline inventories dropped sharply ahead of the start to the summer driving season and refiners processed a record amount of crude.

While these data sets might be considered as bullish, West Texas Intermediate (WTI) crude futures edged up a mere 0.1% (or 4 cents) to $48.36 per barrel Thursday. Prices were kept in check by the continued rise in domestic production thanks to soaring shale output. The Trump administration's decision to opt out of the Paris climate change accord also caused some profit-taking as this could encourage more oil drilling in the U.S., possibly intensifying the global supply glut.

Analysis of the EIA Data

Crude Oil: The federal government's EIA report revealed that crude inventories fell by 6.43 million barrels for the week ending May 12, 2017, following a decline of 4.43 million barrels in the previous week.

The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go down some 3.2 million barrels. A surge in refinery crude runs to record highs and dip in imports led to the big stockpile draw with the world's biggest oil consumer even as domestic production continued to increase to levels not seen since Aug 2015.

Importantly, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – inched down 747,000 barrels from previous week's level to 64.82 million barrels.

While the eighth straight inventory reduction will further help narrow the year-over-year storage surplus, the U.S. still remains awash with excess oil. At 509.91 million barrels, current crude supplies are up 1.1% from the year-ago period and are in the upper limit of the average range during this time of the year.