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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Continue Their Rally As EIA Reports Surprise Draw

Crude oil inventories in the U.S. reached 499.7 million barrels in the week to September 30, the EIA reported, down by 3 million barrels from the previous week. The figure is bound to have a strong positive effect on international markets, which have already enjoyed a boost of optimism following OPEC’s meeting in Algeria, where a production freeze was all but agreed by its members.

Last week the EIA reported a draw of 1.9 million barrels in a not-too-common sync with the American Petroleum Institute, which had estimated inventories to have gone down by 752,000 barrels. Yesterday, API reported a huge draw of 7.6 million barrels, marking the fifth week of negative estimates. Now that EIA has confirmed a draw, though not as huge as the API reported it, it should reinforce a bullish sentiment.

The EIA said refineries processed crude at a daily rate of 16 million barrels, down from the previous week’s 16.3 million barrels, operating at 88.3 percent of capacity as driving season is over and winter demand has not yet kicked in.

Gasoline production averaged 10 million barrels per day in the week to September 30, with inventories rising by 200,000 barrels, remaining above what’s usual for the season. Distillate output stood at over 4.7 million bpd, up on the previous week with stockpiles down by 2.4 million barrels, again in excess of the average for this time of year.

Brent crude hit a high of US$51.72 a barrel in European trading today, up US$0.83, which is its highest since early June, on the back of API’s super positive estimate. West Texas Intermediate also rode the optimism wave, reaching US$49.44 a barrel, up US$0.75.

According to analysts, EIA’s confirmation of the API figures could boost WTI enough to help it pass the US$50 threshold. At the time of writing, WTI was at US$49.59 a barrel, up 1.85 percent from yesterday’s close. Brent was trading at US$51.72 a barrel, up 1.67 percent. Both benchmarks are likely to continue rising during today’s session thanks to EIA figures.

By Irina Slav For Oilprice.com

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  • avenger 426 on October 05 2016 said:
    More bad news for the economy. High crude and gas equals a continued drag on a depression economy. High oil never has and never will drive a recovery, that is basic economics. Prices on goods and services have doubled or tripled over the past 8 -10 years over prices that were already unsustainable. Wages are stagnate or dropping and the economy continues to contract. Smoke and mirror economic news doesn't nullify the truth. The only thing high oil helps is greedy big oil execs and anyone in the greedy oil industry....for the rest of the world it only spells economic destruction. What a joke, oil rally is bad in every way.
  • JHM on October 05 2016 said:
    So are oil traders selling off excess stock in anticipation that the price of oil will soon fall? Such action could extend the rally while off loading risk of falling prices.
  • Matt Biddick on October 05 2016 said:
    avenger, anytime a country/economy can convert a resource into a product that is greatly needed and very valuable, that is a good thing for that country/economy. A country/economy that produces something is more favorable than a country/economy that is mostly comprised of "services". It appears that you harbor envy or resentment for people who have succeeded in the oil and gas industry. Are you similarly resentful towards people who are very successful in other fields? Like the technology sector? Or how about Zuckerberg, who has profited mostly off of a gimmick? Or certain politicians who have enriched themselves by selling their offices and funneling the funds into their foundation?

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