Oil prices ignored a bullish EIA inventory report and dipped on Wednesday amid expectations that the U.S. could soon announce a release from its Strategic Petroleum Reserve (SPR) and other major consuming nations could follow suit with crude releases.
Prices settled more than 2 percent lower on Wednesday and were trading down in early Asian trade on Thursday before reversing to slight gains in the morning EST in the U.S. WTI Crude prices are now down to the $78 handle, trading at $78.84, up by 0.51%, as of 9:56 a.m. EST, and Brent Crude was at $80.93, up 0.71%.
The EIA reported on Wednesday a surprise crude oil inventory draw of 2.1 million barrels for the week to November 12, against analyst expectations of a build of 1.55 million barrels. In gasoline, the EIA reported an inventory decline of 700,000 barrels for the reporting period, which compared with a draw of 1.6 million barrels for the previous week. In middle distillates, the EIA estimated an inventory draw of 800,000 barrels for the seven days to November 12, with production averaging 4.8 million bpd.
Despite the constructive EIA report, Brent and WTI fell by over 2 percent on Wednesday and were both trading below $80 a barrel in Asian trade on Thursday. Related: Is The U.S. Shale Patch Refusing To Pump For Political Reasons?
The main drag on prices continued to be the expectation that the U.S. would announce an SPR release. The U.S. has reportedly asked China and other major consumers such as India, South Korea, and Japan to release crude from their strategic stockpiles too, in a coordinated effort to lower oil prices.
China is already working on a crude oil release, a spokeswoman at the National Food and Strategic Reserves Administration told Bloomberg on Thursday.
"A bullish weekly US stock report was ignored as the market also took stock of recent updates from EIA and IEA, in which they both forecast current tight market conditions could start to ease early next year as supply catches up with softening demand, the latter driven by slowing growth and renewed Covid-related reductions in mobility. Having given back most of the October gas-to-oil switching gains, the first major level of support in Brent is $78.25," Saxo Bank said in a note on Thursday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More