(updates throughout, with market regulations)
By Barani Krishnan
Investing.com – Oil prices rose to end Wednesday’s session with another five-day winning streak after US crude stocks unexpectedly fell last week, giving energy bulls another reason to do so set up markets in space.
The benchmark US crude index was up 98 cents, or 1.2%, to $ 83.42 a barrel. It previously hit a high of $ 83.47, which marked a new seven-year high.
Crude traded in London, the global benchmark for oil, ended Wednesday’s trade up 74 cents, or 0.9%, to $ 85.82. It rose to $ 85.88 earlier, below the three-year high of $ 86.04 reached in the previous session.
WTI and Brent had opened trade on Wednesday amid concerns over China’s planned intervention in energy markets to contain soaring coal prices.
The ramp-up was then fueled by weekly inventory data from the US Energy Information Administration, which showed a drop of 431,000 barrels in the week to October 15, compared to analysts’ expectations for a construction of 1.857 million barrels.
It was the first time in a month that the EIA reported weekly growth in crude inventories after the previous three weeks of consecutive builds that added about 13 million barrels to inventories.
Crude was not the only item in the report to record declines.
fell 5.368 million barrels, the EIA said, compared to expectations of a draft of 1.267 million barrels.
Inventories, which include diesel and diesel, fell 3.913 million barrels during the week against expectations of a 700,000 barrels draw, according to the inventory report.
“The report was solidly bullish, due to the widespread decline in stocks across major categories,” said John Kilduff, founding partner of Again Capital, an energy hedge fund in New York. “The demand for refined products remains strong, especially for gasoline, which is extremely strong.”
Declining crude imports appear to have contributed to the weakening of the gross balance sheet, with the United States shipping nearly 170,000 barrels per day less than the week prior to October 8, for a total of 1.2 million barrels less.
There was also a 500,000 barrels per day increase in crude exports, accounting for 3.5 million barrels during the week.
While the overall theme of the EIA report was bullish, lower than normal refining utilization for this time of year suggests that refiners may delay their normal consumption of crude due to higher prices in the market. .
The EIA said refiner utilization for the week ended Oct. 15 was just below 85% of optimal capacity when it should be closer to 90% at least. The offset to the WTI complex could be the reason, as nearby or even longer term oil was cheaper to buy than barrels for quick delivery.
The spot price of WTI is up nearly 11% in October alone, while gaining 72% on the year. Brent rose 9% for the month and 65% for the year.