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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 Rise After Strong Crude Inventory Draw

The Energy Information Administration reported yet another inventory draw for last week, making it the fifth one in a row with falling inventories. The authority said inventories had gone down by 6.5 million barrels, to 436.5 million barrels

Analysts had expected a draw of 4.5 million barrels, more modest than API’s latest estimate that pegged crude oil inventories 5.2 million barrels lower last week.

Yet traders are not only watching crude oil inventory movements: gasoline stockpiles last week jumped by 1.2 million barrels, the EIA said. This could dampen the bullish mood among market participants, though not by much as there are other events speculators are watching, such as the growth in U.S. shale production and international politics. Last week the bullish bets on WTI stood at a nine-month high, data from CFTC showed.

Refineries processed 17.1 million barrels of crude per day last week and produced 10.1 million barrels per day of gasoline, unchanged from the week before.

Interestingly, as inventories have been falling over the past five weeks, production of crude oil in the United States has been growing. The daily rate reached 9.78 million barrels in the week to December 8, from 8.95 million bpd at the start of the year. All forecasts point to a consistent further increase in U.S. production, which may well undermine OPEC and Russia’s production cut efforts. Related: Canadian Oil Prices Plunge To $30

Meanwhile, WTI has been benefitting by the Forties pipeline shutdown, although the shutdown’s impact on Brent, the international benchmark, has been more pronounced. Earlier this week, Ineos, the operator of the pipeline, said the shutdown could last for a month as custom parts needed to be made. According to Bloomberg, the shutdown could take some 5.5-13 million barrels from global oil markets for the duration.

At the time of writing, WTI traded at US$57.73 a barrel while Brent was at US$63.50.

By Irina Slav for Oilprice.com

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Leave a comment
  • Singapore Sam on December 20 2017 said:
    Looks like shale had the week off for vacation. 12.5 million bbls total commercial draw is about 10 million more than last week, maybe they exported it all to energy hungry China?
  • Disgruntled on December 20 2017 said:
    Should have mentioned the total commercial petroleum inventory decline of 14.2 million barrels. Earlier this year, there was a modest draw of crude one week but the media/market decided to focus instead on the total commercial petroleum inventory number which for that week showed a 15.5 million build. Oil prices got hammered as a result. Seems only fair to highlight a pretty extraordinary (accurate word in this case) decline for this week.

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