U.S. oil prices rise as EIA confirms another inventory draw
The U.S. Energy Department's inventory release showed that crude stockpiles recorded a second straight weekly draw. The decline – though lower than anticipated – helped to prop up the commodity, which was also supported by reports of Saudi Arabia preparing to cut shipments to refiners in the United States in an effort to tighten the market and boost prices. The front month West Texas Intermediate crude futures gained 2.8% (or $1.43) to $52.58 per barrel yesterday, Zacks reported.
The federal government’s EIA report revealed that crude inventories fell by 1.2 million barrels for the week ending Dec 7, following a decrease of 7.3 million barrels in the previous week. The analysts surveyed by The Wall Street Journal had expected crude stocks to go down some 2.8 million barrels.
A pullback in domestic production from record levels led to the stockpile draw with the world's biggest oil consumer. This was partly offset by higher imports and weaker demand, which restricted the decline well below expectations.
Despite decreasing for the second straight week, oil inventories have generally trended higher over the past few months. In fact, stockpiles rose for 10 straight weeks before the previous week’s decline and are up more than 40 million barrels since September. The steady rise is on the verge of shifting the U.S. crude market from year-over-year storage deficit to a surplus. At 442 million barrels, current crude supplies are less than 1% below the year-ago figure and are 7% above the five-year average.
Moreover, the latest report shows that stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – rose 1.1 million barrels to 39.4 million barrels.
The crude supply cover was down from 25.9 days in the previous week to 25.5 days. In the year-ago period, the supply cover was 26.1 days.