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Oil up First Time in 3 Days on Strong U.S. Inventory Draw

CommoditiesJul 28, 2021 10:33AM ET
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© Reuters.

By Barani Krishnan and Liz Moyer

Investing.com — Oil prices rose on Wednesday for the first time in three days after data showing US crude stockpiles resumed their downtrend last week following a surprise hike the previous week.

Prior to the rebound, a new surge in Covid cases from the Delta variant of the virus posed headwinds for the market. 

New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up 74 cents, or 1%, at $72.39 per barrel.

London-traded Brent, the global benchmark for oil, finished the session up 28 cents, or 0.4%, at $74.74.

Oil’s upside was restored after the Energy Information Administration reported that crude inventories dropped by 4.089 million barrels during the week to July 23, compared with analysts' expectations for a draw of 2.928 million barrels.

Crude inventories rose for the first time in nine weeks in the previous week to July 16, after drawing down almost 50 million barrels over two months.

The big drawdowns in crude came as refiners focused on pushing out as much gasoline as they could this summer to meet projected demand for the peak U.S. driving season. 

“It seems that the hit to crude demand is minimal thus far,” said Ed Moya, analyst at New York’s OANDA, adding that crude markets may still need “to wait out the current Delta variant jitters for another couple weeks”. 

According to the EIA, refiners operated last week at 91.1 percent of capacity, not far from highs seen during the summer of 2019, well before the onset of the pandemic. 

Gasoline stockpiles on their own fell by 2.25 million barrels against a forecast 1.24 million. In the previous week, the count for gasoline declined by just 121,000 barrels versus a forecast draw of 1.04 million.

The outlier for the July 16 week, however, was diesel-heavy distillates, which drew down by 3.1 million barrels, more than quadruple the forecast decline of 700,000. The outsized draw shows that demand for trucking and other commercial vehicle fuel was as strong as the consumption of gasoline.

Oil up First Time in 3 Days on Strong U.S. Inventory Draw
 

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Comments (12)
Kelly Mayer
Kelly Mayer Jul 28, 2021 1:17PM ET
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Market wont go any higher than this. Only path now is down. No matter how stellar earnings are oil how high oil goes. Market is capped.
Yiannis Tsoutsoukis
Yiannis Tsoutsoukis Jul 28, 2021 11:47AM ET
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Good to see that you are neutral and objective Barani.
Barani Krishnan
Barani Krishnan Jul 28, 2021 11:47AM ET
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I try, Yiannis. And I also refrain from trashing people for simply doing their jobs (example below)
Guy Gram
Guy Gram Jul 28, 2021 11:27AM ET
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Meanwhile Oil producers valuations look like they reflect WTI in the 50s still. Market does not appear to be buying the free crash flows these companies are producing at these prices. I wonder why?
Nathan Morgan
Nathan Morgan Jul 28, 2021 11:07AM ET
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i am in the oil industry. this will breakout soon enough. i plan on making money when it does
Donald Schneider
Donald Schneider Jul 28, 2021 11:07AM ET
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inflation will begin running hard soon, lack of any fed guidance and their trying to hide policy is going to ****them. Chairman Powell is turning out to be gutless, and all I gather is the new corporate minimum tax policy that's going to come from Europe is going to drive everything. The U.S. economy in all its perceived strength is not leading anything. and the American people aren't being told anything that they can get behind.
Iwan kadarusman
Iwan kadarusman Jul 28, 2021 11:07AM ET
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so, oil will be up or down dude?
Nokulunga Gama
Nokulunga Gama Jul 28, 2021 11:01AM ET
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christos rousakis
christos rousakis Jul 28, 2021 10:59AM ET
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so what
King Agamemnon
King_Agamemnon Jul 28, 2021 10:59AM ET
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Financial journalists love to shoehorn in "covid fears" any time the markets does not rally 1% on news or drops .1% in a day. When crude breaks out later this week even with "Delta Variant" cases increasing they will make up another silly explanation. That is why they are fake news.
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Barani Krishnan
Barani Krishnan Jul 28, 2021 10:59AM ET
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King Agamemnon  I don't NEED skin in the game to know what to write. That's like saying Jeff Currie and his team at Goldman Sachs need to be trading in order to analyze and forecast oil market trends. Give that drivel to someone else, sir. I'm, not equating myself to the GS team, but the principle is the same. You cannot say markets "don't care" about Covid when each negative headline on the pandemic does weigh. Yes, the Fed's pumping more than OPEC these days and that's basically what's keeping everything inflated. Yet, with Powell reiterating his mantra today of no cuts to asset buying and nary a revisit of tightening talk, you'd have to wonder why the S&P and rest of the indexes are whimpering to the close. I think the bears planned a big-time dinner today on taper talk and oddly the longs didn't capitalize on that miss. Will the make-up be tomorrow? Probably. But till it happens, nothing's certain. So don't say, Covid doesn't matter, or for that fact, don't discount anything till it happens.
King Agamemnon
King_Agamemnon Jul 28, 2021 10:59AM ET
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Barani Krishnan  If you peel back any buy side analyst's or strategists comp it is always tied to performance. Writers and journalists on the other hand are paid either to shill an opinion or generate readership and traffic for their platform. It is the same for sports, politics, and financial markets.  The S&P is up over 17% YTD with July up 2.4% already. No losing months aside from January, just continual new highs. The markets have not cared about Covid since March of 2020.  The market only cares about what the FED is willing and able to do with respect to keeping monetary stimulus flowing.  The problems that are surfacing in the Repo market and commodity inflation are the real problems. They pumped so much liquidity that they killed money market rates and had to offer 5bps on repo and now a trillion and change is flowing into bonds. You can see that in the drop on the yields on the 10 and 30. At the same time we can see all inflation numbers coming in hot. These are the real problems not Covid.
Barani Krishnan
Barani Krishnan Jul 28, 2021 10:59AM ET
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That story above and many more WILL make a difference in coming days and weeks, whether you care to admit. I'm totally with you that the flow of green juice won't stop. But boy, do you have some conceit in the way you trash others (bank analysts/writers).
King Agamemnon
King_Agamemnon Jul 28, 2021 10:59AM ET
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Barani Krishnan  I have been investing and trading since I was in college in the tech bubble. Listening to the media, the FED, or I banks for investment advice is for suckers. You would feel the same if you had skin in the game. Take a look at this chart and you will see that daily deaths is not tracking the uptick in covid cases even if you go to the beginning of the month and assume a delay in deaths of 2-3 weeks.. https://www.worldometers.info/coronavirus/country/us/   The data is not baring out the level of fear being hyped by the media. These are all scare tactics to get sheep to take the experimental shots that have recorded more deaths and adverse effects in the VAERS database in 7 months than the last 30 years.
Monrad Pedersen
Monrad Pedersen Jul 28, 2021 10:56AM ET
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Should be a nice bump ye! Maybe at close and friday
Barani Krishnan
Barani Krishnan Jul 28, 2021 10:56AM ET
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I have said as much that it pick up at the end of the day. Let's see.
Gawsul Badsah
Gawsul Badsah Jul 28, 2021 10:50AM ET
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Expecting a nice bump in price
FATIMA AUWAL SULEIMAN
FATIMA AUWAL SULEIMAN Jul 28, 2021 10:43AM ET
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Expecting a nice bump in price
FATIMA AUWAL SULEIMAN
FATIMA AUWAL SULEIMAN Jul 28, 2021 10:42AM ET
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Expecting a nice bump in price
Kart Mak
Kart Mak Jul 28, 2021 10:36AM ET
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Crude drawn at 40% more than the estimates. Expecting a nice bump in price.
 
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