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Oil drops more than 1% as U.S. stockpiles rise sharply

CommoditiesOct 27, 2021 03:05PM ET
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© Reuters. FILE PHOTO: A pump jack stands idle in Dewitt County, Texas January 13, 2016. REUTERS/Anna Driver//File Photo

By David Gaffen

NEW YORK (Reuters) -Oil prices fell on Wednesday after U.S. crude oil stockpiles rose more than expected, even as fuel inventories dropped and tanks at the nation's largest storage hub emptied further.

The bigger-than-expected rise in U.S. crude stocks gave some investors an impetus to unload long positions after strong gains in recent weeks brought both the Brent and U.S. crude benchmarks to multi-year highs.

Brent oil futures ended down $1.82, or 2.1%, to $84.58 a barrel, after closing at a seven-year high on Tuesday. U.S. West Texas Intermediate (WTI) crude settled down $1.99, or 2.4%, to $82.66 a barrel.

"We've had a reasonable pullback on profit-taking more than anything, but still $80 for (WTI) is a strong number," said Gary Cunningham, director of market research at Tradition Energy.

Both benchmarks closed on Friday with a seventh straight weekly gain as major producers hold back supply and demand rebounds after the easing of pandemic restrictions.

Crude oil inventories rose by 4.3 million barrels last week, according to the U.S. Energy Department, more than the expected 1.9 million-barrel gain. Gasoline stocks dropped by 2 million barrels, lowering them to levels not seen in nearly four years, as U.S. consumers grapple with rising prices to fill their vehicles' tanks. [EIA/S]

Storage at the WTI delivery hub in Cushing, Oklahoma, is more depleted than at any point in the past three years, with prices for longer-dated futures contracts pointing to supplies staying at those levels for months.

Oil has advanced of late on the expectation that nations like China and India will respond to shortages in coal and natural gas by switching to crude-derived products for power generation and heating. Such demand could boost overall crude consumption by more than half a million barrels of oil a day.

Cunningham said that expectation may be overstated, however, depending on the state of the global economy.

"There was such a rally in natgas that there was a lot of concerns about generation assets being shifted back to oil-based generation - that was a big part of the rally and now some of that is easing a bit," he said.

Oil drops more than 1% as U.S. stockpiles rise sharply
 

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Comments (12)
Ernest Wong CA
Ernest Wong CA Oct 27, 2021 6:51PM ET
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Do not just say it'll be $100, $200 or whatever, Do it and All in, show us your bet
Cory Larson
Cory Larson Oct 27, 2021 12:34PM ET
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Sharply? Cushing is gonna run out! Crude is not up sharply, until Cushing receives the 40m barrels it's short... that's on top of everything else. Let's not be disingenuous please.
Iyarin Boonnum
Iyarin Boonnum Oct 27, 2021 12:21PM ET
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U lie to me everyday!!!
Val Lange
Val Lange Oct 27, 2021 10:51AM ET
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Storage at Cushing - 3899, the biggest decline since last year, oil is going up just a matter of time.
Eduff San
Eduff San Oct 27, 2021 10:13AM ET
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fake news. Funny who reported this news
Andrew Ulferts
Andrew Ulferts Oct 27, 2021 7:54AM ET
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The Government released more than 3 million bbl from the SPR, so techincally there was a draw. And we are importing, for some reason.
Lars Hellman
LarsH Oct 27, 2021 1:39AM ET
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Misen Energy up 124% this week 🌝
Lars Hellman
LarsH Oct 27, 2021 1:37AM ET
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oil stonks must go 👆👆👆
Danny Schwarz
Danny Schwarz Oct 26, 2021 11:22PM ET
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Disagree. Last time they reported higher than expected inventory there was an after hours dip, then rally the next day. We are so close to the $85 resistance point. Once we pass that, we will go for $100. By that time, the US will get hit with real unemployment, long term commercial vacancies, with inflation. That's "short" time.
ChungLyfe Seiker
ChungLyfe Seiker Oct 26, 2021 11:22PM ET
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Last time also had much lower than expected gasoline and distillate inventories in comparison, however.
Concept Changer
Concept Changer Oct 26, 2021 11:22PM ET
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good
Jay Means
Jay Means Oct 26, 2021 11:22PM ET
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100 by Jan contract
William Bailey
William Bailey Oct 26, 2021 11:13PM ET
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Oil production has been cut to the bone so they could charge huge prices…. Trump taught them to reduce flow when he forced Saudi to cut production . This means consumption is falling fast
JD Samson
JD Samson Oct 26, 2021 11:13PM ET
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is that why Trump had gas prices at two dollars a gallon
Darren Caris
Darren Caris Oct 26, 2021 10:14PM ET
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Good. let them pump and drop oil back to 40. Better for US consumer.
Leo Smith
Leo Smith Oct 26, 2021 10:08PM ET
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very nice
 
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