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American crude oil supplies have plunged by 3.8 million barrels this week, according to the American Petroleum Institute (API) report released on Tuesday.
This is a variance of almost 6 million barrels from what experts polled by Zero Hedge had anticipated: a 2.1 million increase in crude supplies.
This week’s draw comes as a welcome surprise to oil markets after last week’s EIA data showed a massive build of 4.9 million barrels.
West Texas intermediate prices are up $0.48 to $50.77 after the report was released.
Supplies in Cushing, Oklahoma, saw a 1.96 million barrel drop – the biggest withdrawal since February 2014 - slightly larger than the 1.4 million draw that analysts had expected.
Gasoline supplies increased by 929,000 barrels, while distillates fell by 2.3 million barrels.
Tomorrow’s report from the Energy Information Administration (EIA), which often contains widely different figures, will either confirm or deny the API’s findings.
Torbjorn Tornqvist, the CEO of the Singapore-based commodities trader Gunvor Group, said he “doubts prices can go much higher,” which caused WTI prices to show a little weakness until the API report hit the press.
“People are stepping back and saying, what next? OPEC has to prove it’s really going to do something. They’ve talked the talk, now they’ve got to walk the walk,” Michael Hiley, head of OTC energy trading at New York-based LPS Futures, told Bloomberg over the phone, adding that "he wouldn’t be surprised to see us continue this choppy-type price action and go nowhere."
At the time of the report’s writing, Brent stood up $0.16 at $51.68 since markets opened Tuesday morning.
In better days, the draw might have caused numbers to spike and stay there—at least until Wednesday’s EIA report confirmed or denied the findings.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…