US crude surges above $60 per barrel on squeezed supply

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US crude surges above $60 per barrel on squeezed supply

On Wednesday, the 20th of January, the US crude price rose above $60 per barrel for the first time in 2019, to a fresh four-month high, after US government data had displayed a dwindling domestic oil supply. However, analysts had been quoted saying that the gains were largely curbed by increasing concerns over global economic growth and an ongoing US-China trade war.

The front-month US crude future which expired yesterday (Month 20th) had gained 1.36 percent at the day’s closure to $59.83 per barrel, after hitting an intra-day high of $60.12 per barrel, US crude’s highest level since November 12th.

Meanwhile, more active second-month WTI benchmark added 1.6 percent to $60.23 per barrel, while the UK crude cruises over 1.6 percent to close the day at $68.50 per barrel. Prices rose robustly yesterday after the release of a surprising drop in US crude oil inventories due to an increased demand for refining oil and strong export.

According to data from US Energy Information Administration, crude oil inventories dropped 9.6 million barrels last week, while analysts’ forecast was an increase of 3,09,000 barrels. The gap between forecast and original figures of decline was the largest since mid-2018 and US crude stockpiles had fallen to its lowest level since January.

Citing a bullish crude oil market, a partner at Again Capital LLC in New York, John Kilduff said, “The report is bullish due to the large crude oil inventory drawdown, which was a function of low import levels and high export volumes.

The across-the-board inventory declines in crude oil and refined products highlight the tightening market”.