Crude oil futures have spiked more than 6 percent this week following the release of U.S. crude oil inventories data by the Energy Information Administration (EIA) on Wednesday which showed a massive draw in U.S. crude stockpiles confirming an earlier report issued by the American Petroleum Institute (API) on Tuesday.
US Crude Stocks
&EIA’s report showed a 9.9 million barrels draw in U.S. crude inventories in the week through June 22. the draw was the largest since September 2016.
A week earlier, U.S. crude oil inventories declined by 5.9 million barrels. the continuous decline in U.S. crude oil inventories in the last two weeks and the huge amount of decline reported have played an important role in the current spike in oil prices along with other parameters such as:
- A flat U.S. crude oil production for the last three weeks as reported by the EIA.
- A threat made by the U.S. to companies which won’t halt purchases of Iranian crude oil by November this year that they would face powerful sanctions, according to an unnamed senior official from the Department of State.
- Output losses in Canada as its largest crude facilities have been experiencing problems.
However, upward movement in oil price would continue to be capped by:
- Strengthening US dollar
- Looming OPEC production hike
- Russia to increase oil output
Brent crude is now trading around $77.79 a barrel, up by more than 6 percent from where it was a week ago. Similarly, WTI is now trading at $72.46, up by more than 9 percent from where it was a week ago.
Brent Crude Oil Price
Oil price is expected to close the week around this current level as U.S. rig count is also expected to remain slightly unchanged this week as well adding to the positive market sentiment.
