Sometimes I think that trying to trade a U.S. Energy Information Administration report is like opening a box of Cracker Jack. You never know what kind of prize you’re going to get. That being said, oil prices surged over 4 percent on Thursday after the weekly U.S. inventory report showed a shockingly large drawdown in crude stocks.
According to the EIA, U.S. crude stocks dropped 14.5 million barrels the week-ending September 2 to 511.6 million barrels. It represented the biggest weekly decline in stockpiles since January 1999. Oil analysts expected to see a 600,000 increase.
Serving as proof it wasn’t a math error, several hours earlier, the American Petroleum Institute said in its weekly report that U.S. crude inventories collapsed by 12 million barrels last week.
At least the API and EIA reports both showed a draw down. I don’t know what would’ve happened in the markets if one had called heads and the other tails. Also the nearly 24 hour lag between the API and EIA reports gave short sellers a little time to head for the hills.
The EIA said that the huge drawdown was caused by Hurricane Hermine, which led to the closing of some U.S. oil production facilities as well as limiting imports and shipping. Data shows that Gulf Coast crude imports hit the lowest levels on record last week, even though the storm ultimately missed Gulf facilities.
I live on the Gulf Coast of Florida and watched the storm develop for 10 days. It…