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Oil up 5% Despite Crude Build as Bulls Seize Back Control of Market

CommoditiesJul 21, 2021 04:25PM ET
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© Reuters.

(New throughout, with market settlements)

By Barani Krishnan and Liz Moyer

Investing.com -- Oil prices jumped 5% on Wednesday, rising even after a surprise build in crude stockpiles that snapped eight weeks of declines, as bulls seized back control of a market that plunged earlier in the week.

Crude inventories rose by 2.108 million barrels during the week ended July 16, the Energy Information Administration said, wrong-footing analysts who had expected a draw of 4.466 million barrels.

It was the first weekly build since draws that began in late May, which removed more than 40 million barrels from stockpiles. The drawdowns helped send U.S. oil prices to four-year highs of almost $78 a barrel as market punters bet on record fuel consumption in an economy reopening from Covid lockdowns.

Gasoline inventories also fell less than expected last week, drawing just 121,000 barrels, according to the EIA, versus expectations for a drop of 1.043 million barrels.

Distillate stockpiles, which include diesel and heating oil, were the only numbers on the positive side for last week. These declined by 1.349 million barrels against forecasts for a build of 557,000 barrels.

New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up $3.10, or 4.6%, at $70.30 a barrel.

WTI tumbled 7.5% to reach under $67 a barrel on Monday for its worst sell-off in 16 months as producer group OPEC+ announced an output hike and reports of resurfacing cases of Covid-19.

London-traded Brent, the global benchmark for oil, settled up $2.88, or 4.2%, at $72.23 in the latest session. Brent lost 6.8% on Monday.

“It looks like it's payback time for the bulls as the overall rebound in risk appetite on Wall Street has put some wind behind the oil market," said John Kilduff, founding partner at New York energy hedge fund Again Capital. "But the seasonal peak in gasoline consumption is over and if the EIA continues reporting builds like this for the next few weeks amid the new Covid scare, then I doubt prices would continue trending higher."

COVID case rates have been rising in the United States, where 47 of the 50 states have reported more infections than the previous week from the highly-transmissible Delta variant.

Global cases involving the Delta variant have also surged in recent weeks, prompting some countries, including Australia and South Korea, to reintroduce restrictive measures. The United Kingdom on Saturday reported the highest number of daily Covid-19 cases since Jan 2021.

 

 

Oil up 5% Despite Crude Build as Bulls Seize Back Control of Market
 

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Comments (13)
Michael Dell
Michael Dell Jul 22, 2021 4:26AM ET
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Cheap oil of 2015-2020 are long gone
Jeffrey Armstrong
Jeffrey Armstrong Jul 21, 2021 8:47PM ET
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thanks bulls my just went over 4.00 a gallon here in Washington. but I'm glad you are making money.
Joel Schwartz
Joel Schwartz Jul 21, 2021 8:47PM ET
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It’s $4.80 for premium here in CA.
Michael Dell
Michael Dell Jul 21, 2021 8:47PM ET
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You should be paying $10 that should be the price of oil
Michael Dell
Michael Dell Jul 21, 2021 7:53PM ET
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Fire this crying ape krishnan
Barani Krishnan
Barani Krishnan Jul 21, 2021 7:53PM ET
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You'd do well to keep your counsel, considering your loony ideas for $200 oil :)
Michael Dell
Michael Dell Jul 21, 2021 7:53PM ET
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Barani Krishnan You are an ignorant fool…Oil industry isnt for you
Michael Dell
Michael Dell Jul 21, 2021 7:53PM ET
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Barani Krishnan keep crying as Oil is back above $70 in no time
Barani Krishnan
Barani Krishnan Jul 21, 2021 7:53PM ET
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Alright, MDell, now you've started a harassment campaign against me. The idea for you as a reader is to agree or disagree or opine in the column that we write; not to carry out a personal vendetta. The site's administrators have noticed that you have a pattern of doing this and have told me to caution you to desist or risk having your account shut down. You've been warned.
Louis Lipps
Louis Lipps Jul 21, 2021 6:24PM ET
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If you look deeper in the report, which obviously this website does not, you'll notice imports were 17 million barrels higher than the week before which is a one off.  And we only had a 2 million build.  If imports were the same as the week prior we'd draw 15 million for the week.  Regarding gasoline.  Anyone with two brain cells knows we do not draw gasoline stocks down during the Summer whether it's peak driving season or not.  This is the time of year when refiners are running full out in order to have gasoline in inventory for when the real draws take place, which is September and October, refinery maint. season.  Now if Covid runs wild and gasoline doesn't draw during that time expect big problems.  But the reasons I stated are the reasons oil didn't sell off $5 bucks today.  It wasn't a bad report.  Big imports end of story.
Joe Tiriolo
Joe Tiriolo Jul 21, 2021 6:24PM ET
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Agree, those import #’s tell you the strong demand and us supply policy. The Cushing reserves are almost 13 mil less than 2 years ago.
Ma Le
Ma Le Jul 21, 2021 6:24PM ET
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Sorry for the stupid question, but what donuou mean by draw
Louis Lipps
Louis Lipps Jul 21, 2021 6:24PM ET
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Ma Le  Reducing inventory.  Opposite of build.
Barani Krishnan
Barani Krishnan Jul 21, 2021 6:24PM ET
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Louis Lipps, just seeing your comments here. According to the EIA, U.S. crude oil imports averaged 7.1 million barrels per day last week, increasing by 0.9 million barrels per day from the previous week.I'm wondering where you got 17 (seventeen for emphasis) million from the week before. Even if you were to do the math, it would be 6.3 million barrels in total. There were 1,058.9 million barrels of crude stockpiled for the week ended July 9. If you take that 6.3 million barrels off, you'd have 1052.6 million for the week to July 16. Even if you were to add the 1.4 million deficit in Cushing to that, you'd have a max of 7.7 million barrels drawn (one-off, yes). Where did you get 17 million from? Also, anyone with two brain cells and has followed the market long enough will know that a draw is a draw, whether it's in the summer or winter. When the stockpile of anything goes down, it has been drawn down. You can call it whatever you like, but it doesn't change .. (continued)
Barani Krishnan
Barani Krishnan Jul 21, 2021 6:24PM ET
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(continued) ... the fact that it has been drawn. It didn't evaporate into thin air, ok? That summer is the time refiners max out gasoline production is a known fact. No one said it was a bad EIA report. But the fact remains that from a market perspective, the distillates looked the best of the three components of the report. For good measure, John Kilduff breaks it down: "The seasonal peak in gasoline consumption is over and if the EIA continues reporting builds like this for the next few weeks amid the new Covid scare, then I doubt prices would continue trending higher".
Joel Schwartz
Joel Schwartz Jul 21, 2021 5:04PM ET
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What a joke
Robert Cutler
Robert Cutler Jul 21, 2021 4:30PM ET
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Will crude oil price hold above Putin's age?
David Bennett
David Bennett Jul 21, 2021 11:57AM ET
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the ban on federal drilling.
Eduff San
Eduff San Jul 21, 2021 11:10AM ET
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Very great news ever for oil. UP 4% today
David Bennett
David Bennett Jul 21, 2021 11:10AM ET
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great news
Visha Mano
Visha Mano Jul 21, 2021 10:55AM ET
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The price going up or down
ikram tipu
ikram tipu Jul 21, 2021 10:53AM ET
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how it will impact usdcad.will USDCAD pair go up or down now.?? experts opinion
CYRIL AFIABOH
CYRIL AFIABOH Jul 21, 2021 10:48AM ET
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oil dealers have always take advantage of inflation even in Nigeria. price rises and never returns down
Hrdepartment Ved
Hrdepartment Ved Jul 21, 2021 10:42AM ET
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market will go down now
Clinton Powell
Clinton Powell Jul 21, 2021 10:39AM ET
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Then WHY the 45% raise in price at the pump
Shane Weddle
Shane Weddle Jul 21, 2021 10:39AM ET
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Inflation.
Marec Huber
Marec Huber Jul 21, 2021 10:39AM ET
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Greed
ikram tipu
ikram tipu Jul 21, 2021 10:39AM ET
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usdcad will rise up or down. kindly tell me
 
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