January West Texas Intermediate crude oil futures are in a position to close stronger on Friday, but the move isn’t expected to be enough to prevent a lower close for the second consecutive week.
Buyers may also be showing a delayed reaction to Wednesday’s U.S. Energy Information Administration’s weekly inventories report which showed a bigger than expected drop in crude oil stocks. Traders may have also overreacted to a massive rise in gasoline and distillate stocks, drawing the attention of bargain-hunters. Traders are also saying that a surprise jump in Chinese crude demand and a threat of a strike in Africa’s largest oil exporter may also be underpinning the market late in the week.
WTI crude oil was pressured all week and especially on Wednesday after the U.S. Energy Information Administration (EIA) said crude oil stockpiles fell more than expected last week as refineries increased output, but gasoline and distillate inventories posted unexpectedly large builds. Traders drove prices higher initially on the crude oil news, but the rally was stopped and prices turned lower in reaction to the gasoline and distillate reports.
According to the EIA, crude inventories fell 5.6 million barrels in the week to December 1, compared with analysts’ expectations for a decrease of 3.4 million barrels. At 448.1 million barrels, crude stocks, not including the strategic petroleum reserve, were at their lowest since October 2015.