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Oil Rally Kept Alive, Despite Unhelpful U.S. Inventories

CommoditiesDec 08, 2021 03:11PM ET
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© Reuters.

(Updates with settlement prices)

By Barani Krishnan

Investing.com - A beefy build in U.S. fuel stockpiles for a second week in a row didn't dissuade energy bulls from taking their legs off the gas pedal in the oil rally.

Determined to cover more ground from crude’s epic 13% collapse of the past two weeks and possibly bring the market back to above $80 a barrel, oil longs stayed the course on Wednesday, adding a little more to prices after the near 9% rebound of the past two sessions.

Stockpiles of U.S. gasoline and distillates rose heavily for a second week in a row in line with seasonal trends and as the Omicron variant of the coronavirus briefly impacted the confidence of energy traders, the Energy Information Administration’s Weekly Petroleum Status Report showed.

Inventories of gasoline, the most common fuel for automobiles in America, were up by 3.88 million barrels for the week ended Dec. 3, adding to the previous week’s 4.03 million. Analysts tracked by Investing.com had forecast a build of around 1.71 million barrels instead.

Stockpiles of  distillates, commonly turned into the diesel used by trucks, buses, trains and ships and also as jet fuel, grew by 2.73 million barrels on top of the previous 2.16 million. Analysts had expected a rise of around 1.57 million barrels.

Aside from fuels,  crude oil inventories also saw a smaller decline of 240,000 barrels last week compared with the previous week’s 910,000. Analysts had forecast a drop of 1.71 million barrels in crude oil stocks for the latest week.

The Cushing, Oklahoma hub that takes delivery of U.S. crude also saw a significant storage build of 2.4 million barrels for last week.

Consumption of fuels typically falls at this time of year due to seasonally-low autumn-winter driving by Americans. 

The Omicron scare had also contributed to the negative psyche of energy markets over the past two weeks, driving oil prices down by more than 20% as the West Texas Intermediate benchmark for US crude hit four-month lows of under $63 a barrel. 

The so-called WTI benchmark has rebounded since, to above $70 this week after global medical experts, including top US virologist Anthony Fauci, said at the weekend that early studies on Omicron showed its effects might not be as severe as initially feared. Pfizer (NYSE:PFE) and its partner BioNTech also said that three doses of their vaccine could neutralize the variant.

In Wednesday’s trade, WTI settled up 31 cents, or 0.4%, at $72.36 a barrel. The U.S. crude benchmark hit a four-month low of $62.48 last week on Omicron-related fears, after a seven-year high of $85.41 in mid October.

London-traded Brent, the global benchmark for oil, finished the session up 38 cents, or 0.5%, at $75.82. Brent fell to $65.80 last week, from a 2014 high of $86.70 in mid-October.

(Additional reporting by Sam Boughedda)

Oil Rally Kept Alive, Despite Unhelpful U.S. Inventories
 

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Comments (6)
Matias Marquez
Matias Marquez Dec 08, 2021 1:00PM ET
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all a Big pretext for manipulate market . they want $80-$100. finish the game
Barani Krishnan
Barani Krishnan Dec 08, 2021 1:00PM ET
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Exactly.
Robert Cutler
Robert Cutler Dec 08, 2021 11:56AM ET
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Yawn, price of crude oil is about Putin's age
Ganesh Survase
Ganesh Survase Dec 08, 2021 10:50AM ET
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what is impact now in Crude oil Buy or Sell???
Usman Bhatti
Usman Bhatti Dec 08, 2021 10:50AM ET
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Its a buy! It close today above 72$ expect 74$ comin in
Umer Baber
Umer Baber Dec 08, 2021 10:50AM ET
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Now oil going up or down
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Alexander GrozDneprov
Alexander GrozDneprov Dec 08, 2021 10:50AM ET
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Why bearish? The shortage of supply is bigger than expected, so the demand should be higher?
Timothy Kaczocha
Timothy Kaczocha Dec 08, 2021 10:50AM ET
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the shortage of supply is much less than expected by the so-called analysts.
Timothy Kaczocha
Timothy Kaczocha Dec 08, 2021 10:50AM ET
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the shortage of supply is much less than expected by the so-called analysts.
Timothy Kaczocha
Timothy Kaczocha Dec 08, 2021 10:50AM ET
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The shortage of supply is much less than expected by the analysts.
Timothy Kaczocha
Timothy Kaczocha Dec 08, 2021 10:50AM ET
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The shortage of supply is much less than expected by the analysts.
Ganesh Survase
Ganesh Survase Dec 08, 2021 10:50AM ET
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what is impact now in Crude oil Buy or Sell???
Todd Gray
Todd Gray Dec 08, 2021 10:44AM ET
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There's 10's of millions of barrels of oil stowed in tankers anchored right off the US coast lines.
STEVE JACKSON
STEVE JACKSON Dec 08, 2021 10:44AM ET
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Reminds me of Jimmy Carter. Those tankers are from Russia.
 
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