Oil Mixed As Crude Inventories DeclineOil made an attempt to settle above the $54 level but pulled back.
Oil Video 13.01.21.
Crude Inventories Decline By 3.2 Million Barrels
EIA has just released its Weekly Petroleum Status Report which indicated that crude inventories declined by 3.2 million barrels. Yesterday, API Crude Oil Stock Change Report estimated that crude inventories decreased by 5.8 million barrels, but the market is traditionally focused on the EIA data.
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At this point, crude oil inventories are about 8% above the five-year average for this time of the year. The situation is improving but there is still more work to be done to bring inventories to normal levels.
Interestingly, crude oil imports increased by 0.9 million barrels per day (bpd) and averaged 6.2 million bpd. EIA stated that crude oil imports averaged about 5.6 million bpd in the last four weeks. Thus, crude inventories declined despite the major increase in imports which is a positive catalyst for the market.
Meanwhile, gasoline inventories increased by 4.4 million barrels while distillate fuel inventories grew by 4.8 million barrels.
All in all, it was a bullish report which indicated that crude inventories continued to decline despite the sudden increase in imports. If inventories continue to decrease in the upcoming weeks, oil will have good chances to move higher.
U.S. Oil Production Remains Flat At 11 Million Barrels Per Day
The Weekly Petroleum Status Report indicated that U.S. domestic oil production has remained flat at 11 million bpd despite the recent improvements on the oil price front.
This is good news for oil bulls as U.S. oil production remained unchanged at a time when the price of oil crossed the $50 level. Perhaps, oil producers need more time to react to recent developments.
However, I’d note that oil managed to settle above the previous multi-month highs at $43.75 back at the end of November so the oil industry had plenty of time to adapt to the new upside trend.
Most likely, U.S. producers are very cautious as their finances have deteriorated during the current crisis. This is bullish for the market as inventories will decline faster if demand rebounds but U.S. production remains near current levels.
For a look at all of today’s economic events, check out our economic calendar.