Oil jumps on significant crude inventory draw

Crude oil prices rose further today after the RJD registered a 1.1 million barrel oil draw for the week of December 25.

A day earlier, the American Petroleum Agency also helped push up crude oil inventories by estimating a drop of 4.78585 million barrels in the same week.

Last week, the EIA projected a modest inventory decline of 600,000 barrels, which nonetheless helped push prices higher as traders are tied to vaccine updates from traders linked to the expected demand correction next year.

Even with news that vaccinations in the United States are slower than expected, only 10 million people were affected by the oil boom as of December 23, compared to the 20 million planned in December. This was probably the reason Congress last week approved an epidemic stimulus bill that is expected to boost both consumer spending and oil demand.

The EIA report is now expected to intensify the rally. The authority also noted a gasoline inventory draw in the last full week of December, compared to a 1.1 million-barrel drop a week earlier. Gasoline production averaged 2.2 million bpd last week, compared to 8.8 million bpd a week earlier.

In distilled fuels, the EIA increased inventory by 3.1 million barrels in the week to December 25, with production averaging 6.6 million bpd. This compares with an inventory decline of 2.3 million barrels in the previous week, and production averaged 6.6 million bpd.

Last week, refineries processed 14.3 million bpd of crude oil, up from 14 million bpd a week earlier, operating at 79.4 per cent of its capacity, up from 78 per cent in the previous week.

The report suggests that despite drawing appropriate inventory of recent sizes, there is still a way to go before oil and fuel demand improves more strongly. There was also worrying news from the OPEC + camp this week: Deputy Prime Minister Alexander Novak said Russia would argue for further production increases at the January meeting of the expanded cartel because prices were in the maximum range at the moment.

By Irina Slave for OilPrice.com

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