U.S. crude inventories fell by 3 million barrels last week, to a total of 432,6 million barrels; the drop was ahead of expectations of analysts of a 2,7-million-barrel drop; according to the Energy Information Administration.
Firstly, the drop in inventories will set a floor for a stronger oil rally; after oil prices endured seven-week straight losses; only recovering this Monday and Tuesday.
Secondly, crude stocks at the Cushing, Oklahoma, delivery hub rose by 70,000 barrels in the last week, EIA said. While refinery crude runs rose by 6,000 barrels per day in the last week.
Thirdly, refinery utilization runs also rose by 0,2% in the week; while gasoline stocks fells by 2,2 million barrels, to a total of 225,92 million barrels. According to EIA the drop is also bigger than what analysts expected, of a 1,6 million barrels drop.
Moreover, distillate stockpiles, which include diesel and heating oil, rose by 0.6 million barrels in the week to 138.46 million barrels; versus expectations for a 0.3-million-barrel drop, the EIA data showed.
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U.S. crude mix and Brent to rise $75 per barrel by December
In addition, the gasoline stockpiles drop gave oil prices a stedy floor for further gain. As we reported previously, the expectation was that, if gasoline stock rose, prices would fall again; however, gasoline stocks dropping is a sign of strengthening demand.
In fact, oil prices rose again above $70 a barrel this Wednesday; Brent crude was up 22 cents, or 0.3%, to $71.27 a barrel; while the U.S. West Texas Intermediate (WTI) crude was flat at $67.54.
Furthermore, as we reported previously, the rally began just after Mexican supply fell by more than 400,000 barrels per day; following a fire on an oil platform. But also, following the FDA approval of the Pfizer vaccine; and China’s report on decreasing covid-19 contaigons.
On the other hand, Mexico’s state oil firm said it expected to resume production by Aug. 30. In regards to the performance of oil in the stock market, Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “While volatility looks set to continue, we see further gains for oil as global economic normalization continues and OPEC remains disciplined on crude supplies.”
Finally, according to Reuters, the bank expects crude prices to rise to $75 a barrel by December.