Oil rises as US crude stockpile slumps; dented demand hope caps gain

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Oil rises as US crude stockpile slumps; dented demand hope caps gain

On Wednesday, both US WTI (West Texas Intermediate) and UK crude oil futures’ prices settled higher after US EIA (Energy Information Administration) had reported a surprise decline in US crude inventories, while Britain’s approval of AstraZeneca-Oxford’s pandemic-vaccine candidate added to further support, nonetheless gains were largely capped by the prospects of a supply glut.

In point of fact, both US and Brent futures had opened the session lower amid a steep decline in optimism over a larger US fiscal package which in effect would have prodded an earlier-than-anticipated recovery in crude oil demands that had turned tails over a series of slanderous fundamentals apart from a pandemic outbreak including a price war over market shares that led to a historic plunge in US contracts’ prices to a negative territory in April this year.

Prior to that breach in sou'wester, crude oil contracts’ prices had never been into a negative territory. Nonetheless, crude oil futures’ prices took a sharp upturn after a US EIA report had unfurled that the US crude inventories fell by 6.1 million barrels this week to 493.5 million barrels, however, on an annualized basis, US crude oil stockpiles were still more than 10 per cent higher compared to the last week of 2019.

Crude oil gains after fall in US inventories

Citing statistics, in the day’s commodity market closure, UK crude futures had wrapped up the session 0.68 per cent higher to $51.47 a barrel, while US WTI crude futures’ prices added 0.44 per cent to settle down at $48.29 per barrel.

Nonetheless, both US and UK crude oil contracts were substantially lower than a price tag of $66 and $62 per barrel respectively recorded at the beginning of 2020. Meanwhile, as Baker Hughes’ data had revealed that the US energy firms had added 3 more oil and natgas drilling rigs this week, addressing to a surprise plunge in US crude oil inventory this week, a director at energy futures at Mizuho, Bob Yawger said, “We couldn’t even pull down storage levels with a 6.1 million inventory draw which is sad but a reality, and it took the wind out of the sails for a big rally.