Crude oil prices today moved higher after the Energy Information Administration reported an inventory draw of 600,000 barrels for the week to December 18.
This compared with a draw of 3.1 million barrels estimated for the previous week and an inventory build of 2.7 million barrels for the week to December 18, as estimated by the American Petroleum Institute and reported yesterday. Analysts had expected the EIA to report an inventory draw of 3.25 million barrels for last week.
Oil prices have been on the rise the past two weeks on positive vaccine news and hopes for a rebound in demand once vaccinations started on a large scale. However, earlier this week, oil reversed its climb on the news about a new, more virulent variant of the coronavirus infecting thousands in the UK and prompting new travel restrictions in Europe and other parts of the world. The news saw oil traders exit their positions in droves, driving prices down.
A decline in crude oil buying by Asian refiners also contributed to the most recent reversal of oil prices’ fortunes.
Meanwhile, the EIA reported an inventory decline in gasoline, to the tune of 1.1 million barrels, with production last week averaging 8.8 million bpd. This compared with an inventory build of 1 million for the week before last and average production of 8.5 million bpd.
In distillate fuels, the authority estimated an inventory fall of 2.3 million barrels, with production at an average of 4.6 million bpd. This compared with a modest inventory increase of 200,000 barrels for the prior week and production of 4.6 million bpd.
“Oil prices are wilting amid fears that the new strain will derail the fuel demand recovery,” PVM Oil Associates analyst Stephen Brennock told Bloomberg on Monday when prices started falling on virus fears. “If anything, it reaffirms that the path toward demand normalization is anything but smooth.”
At the time of writing, Brent crude was trading at $50.81 a barrel, with West Texas Intermediate at $47.81
By Irina Slav for Oilprice.com
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