Oil Rallies On EIA Drawdown News

Risk On Mode Helping Oil

Crude prices have been helped higher again this week by the continued improvement in risk appetite. Markets are focusing more on more on incoming vaccine news.

This week Pfizer and Moderna announced both have submitted their vaccines for US and EU regulatory approval. Approval is expected in the coming weeks.

Meanwhile, Pfizer’s drug was granted regulatory approval in the UK and will begin to be rolled out in the coming days. With optimism on the rise, markets are looking ahead to the potential for the global economy to get back to normal over spring/summer next year. In turn this is lifting demand for risk assets.

Oil prices are also boosted by the latest report from the Energy Information Administration.

The EIA reported that in the week ending November 27th, US crude oil inventories were lower by 0.7 million barrels. While this was below the 2.4 million barrel decrease, the release has still helped oil prices climb higher.

Gasoline & Distillate Stocks Rise

While headline crude inventories levels were lower, gasoline stocks actually rose over the week. These increased by 3.5 million barrels to 233.6 million barrels. The increase was well above the 2.4 million barrel increase the market was looking for. This reflects yet a further loss of demand for gasoline.

Distillate stockpiles were also higher over the week rising by 3.2 million barrels to 145.9 million barrels. This was in stark contrast to the 209,000 barrel drop the market was looking for. It takes distillate stockpiles back up to around 8% above their five-year average.

Demand Weakening

Elsewhere, the report showed that US crude oil imports averaged 5.4 million barrels over the week, an increase of 171,000 barrels per day on the prior week. Looking back over the last four weeks, US crude imports have averaged 5 million barrels per day. This is down 10.5% on the same period a year prior.

In terms of gauging overall demand levels, the total products supplied number averaged 19.3 million barrels per day over the last four weeks. This is down 9% on the same period a year earlier.

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