Oil prices rose Mar. 21, pushed higher by reports of declines in crude oil inventories from both the US Energy Information Administration and the American Petroleum Institute.
For the week ended Mar. 16, EIA reported a 2.6 million-bbl decline in crude oil inventories, while API reported a drop of 2.7 million bbl (OGJ Online, Mar. 21, 2018). After weeks of rising stockpiles, the decline moved the benchmark West Texas Intermediate price up 2.6% to $65.17/bbl. Brent crude settled at $69.47/bbl, up 3%.
The decline in inventories was the largest draw since early January, and EIA’s estimate of 428.3 million bbl puts oil in storage in the lower half of the average range for this time of year. The drop was “a big variance to Street views looking for a build of 3.2 million bbl,” said Seaport Global Securities analysts in a Mar. 22 note.
“Refiner utilization increased from 90% of 18.55 [million b/d] capacity to 91.7%, increasing implied product output from 16.695 [million b/d] to 17.01 [million b/d]. This contributed to a surprise, large crude oil draw that helped to offset worries about rising production. Prompt month WTI crude oil prices rallied on the crude draw, surpassing $65/bbl and strengthening backwardation (after a brief period of weaker backwardation signals),” the analysts said.
Energy prices
The May light, sweet crude contract on the New York Mercantile Exchange gained $1.63 on Mar. 21 to settle at $65.17/bbl.
The NYMEX natural gas price for April dropped 3¢ to $2.64/MMbtu. The Henry Hub cash gas price gained 4¢ to $2.70/MMbtu on Mar. 21.
Ultralow-sulfur diesel for April gained 2¢ to a rounded $1.97/gal.
Brent crude oil for May was up $2.05 to $69.47/bbl on London’s International Commodity Exchange. The June contract was up $1.94 to $69.07/bbl. The gas oil contract for April was $611.00/tonne, up $17.25.
OPEC’s basket of crudes was $65.39/bbl on Mar. 21, up $1.28.
