By Liz Moyer
Investing.com — U.S. oil stockpiles dropped more than expected in the latest week, the Energy Information Administration said on Wednesday.
Crude inventories dropped 5.899 million barrels last week, compared with analysts’ expectations for a draw of 2.889 million barrels.
“This is certainly something for the bulls to celebrate, a crude draw that’s almost exactly double of expectations and a gasoline build that came in at half the level forecast,” said Investing.com analyst Barani Krishnan. “And distillates actually saw a drawdown that’s more than twice the build expected. Calling this a surprise is an understatement.”
Gasoline inventories rose 309,000 barrels last week the EIA said, compared with expectations for a 786,000-barrel build.
“One reason for the outsized crude draw is, of course, the drop in crude imports by an average of 411,000 barrels per day last week. That in itself took nearly 2.9 million barrels in total off inventories. But to offset this, you had a remarkable drop of almost 855,000 bpd in crude exports. If you do the weekly math on the exports, you’d have put almost 6 million barrels back on the market,” Krishnan said.
“Gasoline production actually increased last week to 9.6 million bpd on the average, according to the EIA. Given that traffic conditions in key urban areas are just beginning to register some peaks, it’s too early to put the crude draw down to outright fuel demand. So, the only conceivable deduction is that crude flows out of the Permian have really fallen drastically from year-ago levels and that’s what’s brought the weekly inventories consistently lower. A year ago, at the peak, the U.S. was producing 13.1 million bpd as everyone would recall. Last week, despite an upward adjustment of 100,000, we turned out just 11 million barrels daily. That’s really telling of the crude inventory situation,” he added.
“Price-wise, we can probably expect WTI to ride this bullish wave higher for the next couple of days to compensate for the volatility that has seen it boxed in at $60 for weeks now.”
Crude Stockpiles Dropped 5.889 Million Barrels Last Week: EIA
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