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US Crude Settles at Eight-Year High on Surprise Weekly Supply Drop

Summary:
Crude oil futures rallied to their best levels in eight months before the Thanksgiving holiday in the US. US crude popped more than 1% midweek after the US government reported a surprise drop in domestic inventories, but the gains were capped by another increase in the number of crude oil rigs. January West Texas Intermediate (WTI) crude oil futures tacked on %excerpt%.74, or 1.65%, to .65 per barrel at 19:50 GMT on Wednesday on the New York Mercantile Exhange. US crude prices are already poised for a weekly gain of more than 9%, paring their year-to-date slump to just 25%. Brent, the international benchmark for oil prices, briefly flirted with before settling nearly flat. February Brent crude futures rose %excerpt%.02, or 0.04%, to .55 a barrel on London’s ICE Futures exhange. Brent is also

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Crude oil futures rallied to their best levels in eight months before the Thanksgiving holiday in the US. US crude popped more than 1% midweek after the US government reported a surprise drop in domestic inventories, but the gains were capped by another increase in the number of crude oil rigs.

January West Texas Intermediate (WTI) crude oil futures tacked on $0.74, or 1.65%, to $45.65 per barrel at 19:50 GMT on Wednesday on the New York Mercantile Exhange. US crude prices are already poised for a weekly gain of more than 9%, paring their year-to-date slump to just 25%.

Brent, the international benchmark for oil prices, briefly flirted with $49 before settling nearly flat. February Brent crude futures rose $0.02, or 0.04%, to $48.55 a barrel on London’s ICE Futures exhange. Brent is also on track for a weekly surge of nearly 10%, lowering its 2020 loss to below 27%.

According to the US Energy Information Administration (EIA), domestic crude stockpiles fell by 754,000 barrels in the week ending November 20. The market had penciled in a supply build of 127,000 barrels.

Oil inventories at the Cushing, Oklahoma storage hub decreased by 1.721 million barrels, following last week’s 1.2 million-barrel boost. Gasoline supplies increased 2.2 million barrels, while distillate stocks decreased by 1.4 million barrels.

After last week’s first decline since the middle of September, the Baker Hughes oil rig count came in at 241, up from 231 in the previous week. This also represented the seventh straight week that the number of crude oil rigs was above 200.

The Baker Hughes total rig count jumped to 320, up from 310 a week ago. This was the third consecutive week that the total rig count in the US was at or above 300.

Investors monitor this metric because it suggests that oil and gas activity is being renewed, which could potentially threaten the gains that have been made in recent months. Since global demand has not returned to pre-pandemic levels, any new supply in the market could send prices lower.

Market observers will be bracing for the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+. It is being reported that the cartel is likely to delay next year’s planned increases in production levels, even though prices are returning to profitable levels.

Rystad Energy’s analyst Bjornar Tonhaugen wrote in a research note:

Positive vaccine news and swift deployment views are behind a significant part of this move in the curve, supported by increasingly firm beliefs by the market that OPEC+ will extend its current output targets for Q1 2021.

A weaker greenback has supported crude prices, too. The US Dollar Index, which gauges the greenback against a basket of currencies, fell 0.28% to 91.97, from an opening of 92.11. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign energy customers to purchase. The index is down 4.6% this year.

In other energy markets, January natural gas futures rose $0.045, or 1.55%, to $2.944 per million British thermal units (btu). December gasoline futures added $0.021, or 1.71%, to $1.2724 per gallon. December heating oil futures picked up $0.0269, or 1.97%, to $1.3911 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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