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EIAs deliver a much needed crude stockdraw

Published Thursday, April 7th, 2016

It has been a long time since the EIA weekly US crude oil stock figures have given the market something bullish to work with. After seven weeks of builds crude drew, and not by a gesture but by 4.9 million bbls, 4.3 million bbls of which was on the Gulf coast where refinery run rates reached 95% of capacity. The API figures released on Tuesday evening had given fair warning so crude was already up 80 cts/bbl before the EIA numbers came out. The EIA release added another 60 cts/bbl and the momentum continued into the close.

All the other numbers were rather bearish with gasoline building 1.4 million bbls following six consecutive weeks of declines, distillates built 1.8 million bbls, total commercial stocks 1.1 million bbls and Cushing 357,000 bbls. Total commercial stocks have built by 45 million bbls since the beginning of the year putting them at 11% above last year’s levels and 18% above the five-year average. After the initial excitement these numbers will take their toll on prices in the coming days.

Brent ended the day +1.97 at $39.84/bbl and WTI gained 1.86 to close at $37.75/bbl. Heat gained 6.57cts/gal and gasoline 1.69cts/gal. The crude stock draw does not justify this sort of price move so we must suspect that there were other factors at work. The candidates are the Keystone pipeline disruption and the OPEC production freeze.

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Posted by David Hufton