Although the EIA weekly report showed a larger-than-expected decline in crude oil inventories, the price of the commodity declined sharply after news that U.S. crude oil production increased. Thanks to these circumstances, light crude lost 1.62% and closed the day under important support. What does it mean for the black gold?
Crude oil prices are rising after Genscape reported that supplies in Cushing, Okla., suddenly plunged by one million barrels. This is adding to the perception that the physical oil market is tightening much faster. Brent spreads driving the market into contango is signaling that demand is exceeding short term supply. Historic draws in U.S. inventories are signaling the same thing. Oil supply in the United States is back below 2016 levels.
Crude oil prices were a dog yesterday as the summer doldrums and rising U.S. oil production failed to inspire the market despite another near record crude oil draw. The market also fell on a report that the United States will sell more oil out of the Strategic Petroleum Reserve. Shale hopes may run high as we get into shoulder season yet the drop in oil inventory will start to become a concern as soon as the normal players start paying attention to massive crude drawdowns and near record global demand.