Investing.com — Oil prices rose on Wednesday after data showed a staggering unexpected drawdown in weekly U.S. crude stockpiles that made traders as wary about the numbers as they felt encouraged about the signs of improving demand for fuel months into the Covid-19 pandemic.
New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled up 23 cents, or 0.6%, at $41.27 per barrel.
London-traded Brent, the bellwether for global crude prices, closed the New York session up 53 cents, or 1.2%, at $43.41.
Crude inventories declined 10.6 million barrels during the week ended July 24, the U.S. Energy Information Administration said, confounding traders who were expecting a build of 357,000 barrels. On Tuesday, the oil industry's own data showed a draw down of 6.8 million barrels last week, compared to expectations for a draw of 1.2 million.
"The EIA data set has just become so volatile week after week that now it’s become an ‘anything possible’ dynamic," said Investing.com analyst Barani Krishnan.
"Gone were the days when analysts could say with a fair sense of comfort that this is the likely draw or this is the likely build, plus minus up to 1 million barrels. Now, be prepared to add another 5 million barrels — or in today’s case, 10 million — either way."
Krishnan notes that the latest draw is the result of crude refinery inputs rising by almost 390,000 barrels per day more, or a net 2.7 million barrels on the week. Exports rose by about 200,000 barrels daily, or a net 1.4 million on the week. Imports shrunk by 800,000 barrels daily, or a net 5.6 million on the week. And there was another drop of 1.7 million barrels out of the PADD 5 producing district that covers the West Coast.
"Add it up and it brings you down by just over 11 million," Krishnan added. "So that’s not too far from what the EIA reported, though the math itself doesn’t undo the mind-boggling impact it’s having on traders, who are just overwhelmed by the sheer volatility in the data week after week. Add the whole enigma of the new Covid-19 wave and most people just can’t decide which way to place their chips."
Notwithstanding the drawdown, crude stored at the Cushing, Oklahoma, hub that takes delivery of oil delivered against contracted barrels of WTI rose by 1.3 million barrels last week, EIA data showed.