Oil jumps on crude stock drawing

Crude oil prices rose today after the Energy Information Administration reported a 3.1 million barrels of crude oil supply for the week of Dec. 11.

The report came a day after the American Petroleum Institute estimated the stockpiling of crude oil and fuels, which put prices under pressure just as they started to improve again.

Analysts had expected the EIA to report a drop of 3.5 million barrels in crude oil inventories for the week to December 11, after estimating massive production of more than 15 million barrels for the previous week.

As for gasoline, the authority reported a stock build-up of 1 million barrels for the previous week, compared to a significant increase of 4.2 million barrels for the previous week, following a further increase of 3.5 million barrels per day for the previous week. Gasoline production averaged 8.5 million barrels per day last week, compared to 8.3 million barrels per day a week earlier.

For middle distillates, the EIA estimated a supply increase of 200,000 barrels for the week to December 11, compared to production of 5.2 million barrels for the week before and another, from 3.2 million barrels for the week before. Distillate fuel production averaged 4.6 million barrels per day last week, compared to 4.7 million barrels per day in the previous week.

API’s inventory report surprised market participants and triggered a price drop, which was also fueled by renewed concerns about demand as several European countries restored or tightened their movement restrictions – despite the upcoming holidays – to stop the spread of the coronavirus.

It seems that initial enthusiasm about the recovery in oil demand, driven by mass vaccinations, is starting to wane as challenges surface in terms of availability and distribution. These challenges mean that it will take more than a few weeks to vaccinate enough people to talk about returning to normal, just as medical experts warned during the height of the vaccination hype a month ago.

By Irina Slav for Oilprice.com

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