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Oil on Renewed 5-Day Rally after Surprise U.S. Crude Stocks Drop

CommoditiesOct 20, 2021 03:16PM ET
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© Reuters.

(updates throughout, with market settlements)

By Barani Krishnan

Investing.com - Oil prices rose to finish Wednesday’s session with a new five-day winning streak after U.S. crude stockpiles unexpectedly fell in the latest week, giving energy bulls yet another reason to bid up markets in the space.

U.S. crude’s West Texas Intermediate benchmark settled up 98 cents, or 1.2%, at $83.42 per barrel. It earlier hit session high of $83.47, which marked a new seven-year peak.

London-traded Brent crude, the global benchmark for oil, finished Wednesday’s trade up 74 cents, or 0.9%, at $85.82. It rose to $85.88 earlier, falling short of the three-year high of $86.04 hit in the previous session.

WTI and Brent had opened Wednesday’s trade down on concerns about China’s planned intervention in the energy markets to tame soaring coal prices.

The run-up later was fueled by weekly inventory data from the U.S. Energy Information Administration that showed Crude stockpiles declined by 431,000 barrels in the week to Oct. 15, compared with analysts' expectations for a build of 1.857 million barrels.

It was the first time in a month that the EIA had reported a weekly growth in crude stocks after three previous weeks of back-to-back builds that added about 13 million barrels to inventories.

Crude wasn’t the only component of the report to register declines. 

Gasoline inventories fell by 5.368 million barrels, the EIA said, compared with expectations for a draw of 1.267 million barrels.

Stockpiles of distillates, which include diesel and heating oil, slid by 3.913 million barrels in the week against expectations for a draw of 700,000 barrels, the inventory report showed.

“The report was solidly bullish, due to the across-the-board inventory declines in the main categories,” said John Kilduff, founding partner at Again Capital, an energy hedge fund in New York. “Refined product demand remains robust, especially for gasoline, which is exceedingly strong.”

Lower crude imports appeared to have contributed to the thinner crude balance sheet, as the United States shipped in nearly 170,000 barrels per day less than the previous week to Oct. 8, or a total of 1.2 million barrels lower.

There was also a 500,000-barrels per day uptick in exports of crude, accounting for 3.5 million barrels over the week.

While the overall theme in the EIA report was bullish, lower-than-normal refining utilization for this time of year suggested that refiners may be holding up their normal uptake of crude due to the heightened prices in the market.

The EIA said refiner usage for the week ended Oct. 15 was just below 85% of optimal capacity when it ought to be closer to 90% at least. The backwardation on the WTI complex could be the reason, as nearby or even  longer-dated oil was cheaper to buy than barrels for prompt delivery. 

WTI’s spot price is up almost 11% for October alone, while gaining 72% on the year. Brent has risen 9% for the month and 65% for the year.

Oil on Renewed 5-Day Rally after Surprise U.S. Crude Stocks Drop
 

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Comments (10)
Klaus Weyers
Klaus Weyers Oct 21, 2021 12:21AM ET
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well spoken, Manfred..
Kevin Avila
Kevin Avila Oct 20, 2021 6:39PM ET
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I hope it goes to $300…
Manfred Kruger
Manfred Kruger Oct 20, 2021 3:53PM ET
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That is what happens when the extreme progressives push the Biden Administration to disincetivize the fossil fuel industry and cancel Canatian oil pipelines and Federal drilling rights. Get ready for $5 gas and way higher electricity bills soon.
jason white
jason white Oct 20, 2021 3:53PM ET
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Yup. As usual, liberals didn't think through ramifications of their ideals. Attack US drilling industry and pipelines, lose energy independence and become beholden to OPEC. Who would have thought? oh, right, anyone with a brain. By the way, what will power Biden's multi-trillion 'green infrastructure transformation'? Oh yeah: oil. Tons and tons of oil. Oil prices going to the moon.
Kenneth nelson
grasshopper Oct 20, 2021 3:30PM ET
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Brandon's failed energy policy
Todd Gray
Todd Gray Oct 20, 2021 1:42PM ET
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Roo-terds, like most other news sources, is full of it! They are contracturally obligated to create and continual stream of cognitive dissonance. Soft MK Ultra stuff.
Barani Krishnan
Barani Krishnan Oct 20, 2021 1:42PM ET
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Excuse me, Todd. This is MY story, not Reuters. I am neither bull nor bear, contractually obligated to create fertilizer for anyone, including you. Hope that settles it.
Todd Gray
Todd Gray Oct 20, 2021 1:37PM ET
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Another oil hustle is afoot. Hose the little guy!
Mar Døm
Mar Døm Oct 20, 2021 12:03PM ET
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Ask how
Mar Døm
Mar Døm Oct 20, 2021 12:03PM ET
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Ask how
statesboro deals
statesboro deals Oct 20, 2021 11:08AM ET
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you just reported yesterday that stockpile increased by over 2 million and now the next day a new report it fell. Smh Good reporting
Barani Krishnan
Barani Krishnan Oct 20, 2021 11:08AM ET
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Do you know the primary difference between API and EIA data? One is industry and the other is government. One is the best of data compiled from voluntary reporting while the other comes from mandated reporting. Please learn this fundamental difference before you comment.
John McKeachnie
John McKeachnie Oct 20, 2021 11:08AM ET
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Great reporting, who benifits??
Barani Krishnan
Barani Krishnan Oct 20, 2021 11:08AM ET
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John McKeachnie  Just so that you and the rest here be clear: Investing.com is a provider of free news, prices and other content. As a company, it does not have a position in any of the markets it covers and is not responsible for any individual's profits or losses. Personally, I do not trade either to ensure impartiality in the work I do. That, however, doesn't preclude me from having opinions on the market. Bests.
Ravin Chatelall
Ravin Chatelall Oct 20, 2021 11:08AM ET
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if you read this report it clearly gives reason for yesterday differnece. API and EIA is too different reports with EIA having acees to more data.
Barani Krishnan
Barani Krishnan Oct 20, 2021 11:08AM ET
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Ravin Chatelall  Yes, thank for your that input.
Michael Boudreaux
Michael Boudreaux Oct 20, 2021 11:05AM ET
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Hmm
محمد حسین
محمد حسین Oct 20, 2021 11:05AM ET
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