Oil has surged close to 4% on Thursday on the back of the biggest weekly US crude stocks drop. What caused this large decline in US crude oil inventories? Is it an indicator that the global oil glut is shrinking?
8 September, AtoZForex – Oil prices have climbed about 3.8% today, after the US crude oil inventories fell surprisingly for the first time in about 10 weeks. Analysts had been expecting an increase of 500,000 barrels in US crude stockpiles. Yet, the US crude stocks declined by 14.5 million barrels to 511.6 million barrels over last week.
According to the Energy Information Administration (EIA) it is the biggest weekly drop since 1999, but analysts do not believe that it is enough to affect the oil glut. However, for the first time in two weeks, Brent crude surged near to the $50 level. At 16:56 GMT, the global benchmark rose as much as 3.8 percent to the $49.82 level.
What caused the biggest weekly US Crude stocks drop?
Analysts have commented that the large US crude stocks drop was caused by the tropical storm Hermine, which threatened the refining region on the US Gulf Coast last week. As a result of the storm, fuel and oil cargoes were kept from reaching the US ports. Due to the delayed ships, the analysts don’t believe that it is an indication that the oil glut is shrinking.
Will Oil prices climb to $50 and beyond?
Since Monday, oil has been on the rise this after Saudi Arabia and Russia agreed to collaborate on stabilizing the market. Another influential factor that positively affected the oil prices in recent days is the weak USD. Along with the US crude stocks drop today, can we expect oil prices to climb above $50?
According to the president of energy consultant WTRG Economics, James Williams commented that next week: “Crude stocks will likely rise dramatically as those ships offload this week”. Indicating that it could be a one-off situation. Moreover, oil prices have stayed within the range of $40 to $50 per barrel in the last months; amid talks among the OPEC and Non-OPEC oil producers for an agreement on an oil output freeze.
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