US crude futures surge $2.99/bbl on falling inventories

10 July 2013 21:33  [Source: ICIS news]

US crude futures surge $2.99/bbl on falling inventoriesHOUSTON (ICIS)--NYMEX light sweet crude (WTI) for August delivery extended the previous session’s gains, settling at $106.52/bbl, up $2.99, in response to the weekly supply statistics from the Energy Information Administration (EIA) showing a substantial drawdown in crude and gasoline inventories.

Crude oil stockpiles have declined nearly 20m bbl in two weeks, according to EIA data, while refinery runs rose to 92.4% of capacity in order to satisfy domestic and export markets demand.

With the bottleneck at the storage hub in Cushing, Oklahoma easing as a result of barrels moving to refineries by pipeline and rail, WTI has been re-aligning in value with global markets despite increasing domestic oil production.

Sentiment that the crude de-stocking will continue as more barrels bypass the NYMEX contract delivery point at Cushing has strengthened the market’s backwardation, where front month material is more valuable than forward months.

Upside momentum also triggered technical buy-stops, lifting August crude to an intra-day high of $106.66/bbl, up $3.13, before settling just off the top of the range. WTI has gained over $5.00.bbl since the Fourth of July holiday and is now in search of a top but also in overbought territory and in need of a correction.

International oil benchmark Brent has been narrowing the spread to WTI and finished the day at $1.99. ICE Brent for August delivery settled at $108.51/bbl, up 70 cents.

By: Ignacio Sotolongo
+1 713 525 2653

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