Oil Surges as Key U.S. Storage Hub Shows Biggest Draw in Months

Oil held near its lowest in more than two weeks after a report showed American crude stockpiles rose strongly in the past week

Jacquelyn Melinek

21 Nov 2019, 09:13 AM IST

Oil Surges as Key U.S. Storage Hub Shows Biggest Draw in Months

A worker pours extracted crude oil into a bucket in the village of Wonocolo, East Java, Indonesia (Photographer: Dimas Ardian/Bloomberg)

(Bloomberg) -- Oil jumps the most since the first of the month as American crude stockpiles at a key storage hub shrank by the most since August.

Futures rose 3.4% in New York, the biggest gain since Nov. 1. The Energy Information Administration reported that crude supplies at Cushing, Oklahoma, declined by 2.3 million barrels, the biggest draw in three months. Nationwide crude inventories rose 1.38 million barrels, less than reported by the American Petroleum Institute on Tuesday.

There is some unrest in the market that could be supporting prices, said Ashley Petersen, oil market analyst at Stratas Advisors LLC. “But that doesn’t change the fundamental picture that was bringing down prices over the past two weeks, concerns about future demand and supply,” she said. “So that makes the question: ‘How long can this rally last?’”

Although nationwide crude stockpiles rose, the size of the build was smaller than the volume of crude released from the Strategic Petroleum Reserve. Combined crude and products inventories fell by 6.93 million barrels.

“The Cushing draw is pushing WTI prices higher for sure,” said Matt Sallee, portfolio manager at Tortoise, a Kansas firm that oversees more than $21 billion in assets. “We’ve seen some interruption from the Canadian supply, but it’s hard to say in any given week, but I think that’s what’s supporting WTI prices.”

West Texas Intermediate for December delivery, which expires Wednesday, rose $1.90 to settle at $57.11 a barrel on the New York Mercantile Exchange. The more-active January contract increased $1.66 to end the session at $57.01.

Brent for January settlement gained $1.49 to close at $62.40 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.39 premium to WTI for the same month.

The EIA report also showed gasoline inventories rose 1.76 million barrels while distillate supplies fell 974,000 barrels. Crude production remained strong at a record level of 12.8 million barrels a day for the second week in a row.

Other oil-market news
Gasoline futures rose 3.3% to end at $1.6563 a gallon. Russia offered yet another explanation for why its oil production may exceed its OPEC+ target for November, months after promising to improve the country’s lax implementation of output cuts. Oil refining margins are plunging lower in Europe and Asia, fueling expectations among industry analysts that the plants will have to cut processing rates -- and with it demand for crude. Saudi Aramco’s bankers are seeing sufficient early demand to pull off the state oil giant’s initial public offering just three days after launching the deal, people with knowledge of the matter said.

Other oil-market news

Gasoline futures rose 3.3% to end at $1.6563 a gallon.
Russia offered yet another explanation for why its oil production may exceed its OPEC+ target for November, months after promising to improve the country’s lax implementation of output cuts.
Oil refining margins are plunging lower in Europe and Asia, fueling expectations among industry analysts that the plants will have to cut processing rates -- and with it demand for crude.
Saudi Aramco’s bankers are seeing sufficient early demand to pull off the state oil giant’s initial public offering just three days after launching the deal, people with knowledge of the matter said.

To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers