Both of the crude oil benchmarks found respite last night after data released from American petroleum Institute (API) showed the biggest inventory drawdown of the 21st century. Crude oil inventories declined by 12 million barrels this week marking biggest drawdown since 1999. Within the five minutes of the release, the crude oil benchmarks were up almost 1.5 percent. After seeing builds in last five of the six weeks, analysts had expected an increase just under a million barrel.
While Crude oil supply glut has somewhat diminished in the raw materials market, the focus has now shifted to the glut finish products, inventories for which are at multi-decade high. In addition to that, gasoline inventories declined too and by more than expected. Analysts had expected a drawdown of 750,000 barrels but it turned out to be 2.4 million barrels.
This data should provide support to the crude oil ahead of the informal OPEC meeting in Algeria. While a production freeze is unlikely but a clear path forward could emerge.
WTI is currently trading at $46.3 per barrel and Brent at $2.4 per barrel premium.
