Oil prices have risen to two-week highs, boosted by data showing a surprise draw in US crude inventories and also by a drop in the US dollar.
US crude inventories unexpectedly fell 1.6 million barrels last week as net imports dropped to a record low and exports surged, while inventories at the key storage hub in Cushing, Oklahoma continued to slide, according to data from the Energy Information Administration.
Crude inventories had been forecast to rise 1.8 million barrels, as stocks seasonally rise when refineries cut intake to conduct maintenance.
‘It was a trifecta for the bulls with imports down, Cushing inventories continuing to slide lower and exports of crude soaring to over 2 million barrels per day,’ said John Kilduff, partner at Again Capital LLC in New York.
West Texas Intermediate (WTI) crude futures rose $US1.07, or 1.7 per cent, to $US62.75 a barrel by 1.56 pm EST (0556 Friday AEDT) after peaking at $US63.09, its highest since February 7.
Brent crude gained 96 cents, or 1.5 per cent, to $US66.38 a barrel, after touching its two-week high at $US66.56.
Crude stocks at the Cushing, Oklahoma, delivery hub for US futures fell 2.7 million barrels last week, the ninth straight week of drawdowns, the EIA said.
‘The reason that the inventories continue to drop at Cushing is because the market remains backwardated and therefore it’s uneconomical to be storing crude,’ said Andrew Lipow, president of Lipow Oil Associates in Houston, Texas.
In a market structure called backwardation, prompt crude prices are higher than forward prices, discouraging storage.
‘It makes more sense to liquidate your on-hand inventories,’ Lipow said.
US net crude imports fell 1.6 million barrels per day to just below 5 million bpd last week, the lowest level since the EIA started recording the data in 2001.
The decrease in net imports caught the market offguard, said Brian Kessens, portfolio manager at energy investment manager Tortoise Capital in Leawood, Kansas.
Exports of US crude jumped to just above 2 million bpd, close to a record 2.1 million hit in October. That helped push net imports to the lowest level on record.
The Louisiana Offshore Oil Port (LOOP), the largest privately owned crude terminal in the United States, completed the first very large crude carrier (VLCC) crude oil loading operation at its deepwater port, the company said on Sunday. The supertankers can ship about 2 million barrels of oil.
Oil prices were also supported as the dollar declined from an eight-day peak. A weaker dollar makes oil and other dollar-denominated commodities cheaper for holders of other currencies.
The correlation between moves in the oil price and the dollar has strengthened in recent weeks, as investors increasingly sell other assets to buy the US currency on expectations of a faster pace of rate rises.