Oil prices in the U.S. took a 2% drop in Wednesday’s trading, ending five consecutive trading sessions where they had risen nearly 50%.
West Texas Intermediate crude fell 57 cents or 2% to end the day at $23.99 a barrel on the New York Mercantile Exchange. It was considered something of a volatile session as trading at one point rose 6% hitting a high of $26.08 before tumbling 8% and hitting a session low of $22.58 per barrel. The up and down trading came after oil rose 20.45% on Tuesday.
International benchmark Brent Crude fell $1.06 or 3% settling at $29.91 at day’s end. Natural Gas prices were down 19 cents or 9% and finished the day at $1.98 per Million Btu.
“The rally in crude also feels lofty as discussions with refiners continue to suggest lower run cuts are in the cards given weak margins,” analysts at Tudor, Pickering, Holt & Co., a Houston-based energy investment bank, said in a note to clients Wednesday.
Data from the U.S. Energy Information Administration released Wednesday showed that for the week ending May 1 inventories rose by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting, according to FactSet.
Over the last week, WTI has soared more than 50% as easing shelter-in-place restrictions fueled optimism that demand for oil may have bottomed. Given the rapid run higher, Jeff Kilburg, CEO at KKM Financial, said the selling could be due to investors locking in gains.