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Oil Ends up After Staggering Crude Draw That Raises Questions

Published 07/29/2020, 09:49 AM
Updated 07/29/2020, 03:51 PM
© Reuters.

© Reuters.

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.

Latest comments

does your "expert" interview himself?
what a funny thing all this yellow "statistical" data, reminds about Soviet Union propaganda statistics.
with little completions this year the decline curve for existing completed wells will kick in.
Trump just spoke in Texas. Major epic boom in oil coming! Whoever invested in oil both onshore and offshore, get ready for a BOOM.
oil is going the way of coal
All you "speculators" are forgetting something. Something that offsets, EV's, and all the BS efficient products that consume fuel. Its called population increases.... Nobody calculates the population increases which offsets your idea of "declining demand".   Any population boom of age throw out the declining usage theory.
What population increase? Birthrate down and deathrate way up.
Great point
I think they dont count all the ships waiting full and the swimmingpools people filled with oil.
Ah!! pay attention ships are no longer stacked up.. Been away for a bit I guess
After keeping the rigs on the grounf for months, now steep decline curve for producing wells will kick in.
China is crazy-buying oil but it’s backed up in all their ports.The shoe will drop soon to test $25
Wht about oil price in future bro???
$25 LOL its about to retest the $52 GAP
And next week they will build with a fresh supply. This week's supplies from the previous week ran out. Seems to the pattern.
yup.. 3 card monte
absolutely no sense
funny report
50 year supply 20 years of declining demand .. you do the math
pentru ca l am uitat
global reserves 53.3 years according to BP .. sure it's an estimate, but close enough
You don't think people in Africa and Asia want cars and electricity? There are 5 billion of them.
Eur went up
And the CAD???
If oil, breaks up it's resistence then CAD goes Bullish
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