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US Crude Rallies on Second Straight Weekly Supply Drop

Summary:
Crude oil futures are rallying in the middle of the trading week after the US government reported the second straight weekly decrease in domestic inventories. But it is unclear if US crude prices could sustain the momentum given that industry observers are anticipating more supplies coming to market for the remainder of 2020. Without an uptick in demand, oil might face another significant glut heading into 2021. November West Texas Intermediate (WTI) crude futures picked up %excerpt%.55, or 1.38%, to .35 per barrel at 15:04 GMT on Wednesday on the New York Mercantile Exchange. US crude has been looking to ignite a rally following the 7% drop over the last month, rising 0.5% over the last week. Year-to-date, WTI prices are still down about 34%. Brent, the international benchmark for oil prices,

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Crude oil futures are rallying in the middle of the trading week after the US government reported the second straight weekly decrease in domestic inventories. But it is unclear if US crude prices could sustain the momentum given that industry observers are anticipating more supplies coming to market for the remainder of 2020. Without an uptick in demand, oil might face another significant glut heading into 2021.

November West Texas Intermediate (WTI) crude futures picked up $0.55, or 1.38%, to $40.35 per barrel at 15:04 GMT on Wednesday on the New York Mercantile Exchange. US crude has been looking to ignite a rally following the 7% drop over the last month, rising 0.5% over the last week. Year-to-date, WTI prices are still down about 34%.

Brent, the international benchmark for oil prices, also rose midweek. November Brent crude futures advanced $0.63, or 1.51%, to $42.35 a barrel on London’s ICE Futures exchange. So far this year, Brent prices are down 36%.

According to the US Energy Information Administration (EIA), domestic crude stockpiles declined for the second consecutive week by 1.6 million barrels for the week ending September 18. The market had forecast a drop of four million barrels, but it is still higher than the private-sector projection of an increase of 691,000 barrels.

Oil inventories at the Cushing, Oklahoma storage facility were unchanged at 54.3 million barrels. Gasoline stocks decreased by four million barrels, while distillate supplies declined by 3.4 million barrels.

Last week, the Baker Hughes oil rig count dipped from 180 to 179, but the total rig count jumped from 254 to 255.

Despite the rise in prices, the industry is bracing for additional supplies. US oil and gas firms are expected to restart operations to take advantage of recovering prices. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, are tapering their production cuts, adding as much as two million barrels per day. But analysts say that OPEC is likely to wait to hike production until its December meeting.

In other energy commodities, November natural gas futures spiked $0.943, or 51.42%, to $2.777 per million British thermal units (btu). November gasoline futures picked up $0.0212, or 1.91%, to $1.1657 per gallon. November heating oil futures tacked on $0.0217, or 1.96%, to $1.1307 a gallon.

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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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