Following the previous session's gains due to higher than expected USA inventory draws, crude prices on Wednesday rose again, this time due to the Energy Information Administration corroborating the American Petroleum Institute's earlier calculation of an 11.1 million barrel decline in stocks.
Inventories at the nation's main delivery hub in Cushing, Oklahoma, where WTI futures are priced, slumped last week by almost 2 million barrels to their lowest since December, the data showed. Brent crude futures were 0.56 percent lower to $60.15 per barrel. The lines will eventually have a combined total capacity of more than 1 million barrels per day (bpd), the companies have said.
John Kilduff, founding partner at Again Capital, summarized the EIA's findings: "It was an incredibly bullish report, one of the more bullish we've had in a while, with draws across the board and of course the massive crude oil drop, which was generated by another drop in imports". "Recession fears are casting a shadow on sentiment and oil prices should keep dancing to the tune of the US-China trade saga", said Stephen Brennock of oil broker PVM. It is forecast to strengthen and become more powerful on Sunday, the National Hurricane Centre said.
EOC Alert #3 - Hurricane Dorian
As the storm brews in the Atlantic and moves eastward, those in its path have recorded video of the storm's power and strength. It will then strengthen to a Category 2 by Sunday morning before making landfall on the east coast of Florida or Georgia.
"It's simply positioning ahead of the long weekend", said Bob Yawger, futures director at Mizuho Securities USA in NY.
Over the past four weeks, crude oil imports averaged about 7.0 million b/d, down by 985,000 b/d year on year, while crude oil exports averaged about 2.59 million b/d, up by about 999,000 b/d year on year. "And you're going to have another big pipeline that's going to continue to change the math".
In its weekly publication, the EIA said crude oil inventories fell by 10 million barrels per day, compared with analysts' estimate for a draw of 2.1 million barrels, and provided a strong boost to crude oil prices. Cheaper rates will encourage greater flows to the coast and reduce deliveries into Cushing, analysts said.
For a year now, Chinese refiners and traders have held their collective breaths, scared for the day when the government would finally unleash tariffs on USA crude oil imports. The Organization of Petroleum Exporting Countries and its allies said this week they expect to deplete the global oil surplus with their cuts, and falling inventories in America are indicating some level of success. -China trade war, allowing the US crude benchmark to mark its highest settlement in more than two weeks. -China trade war raging between the world's biggest oil consumers, along with the potential hit to oil demand, are keeping prices in check.