By Barani Krishnan
Investing.com - Oil prices rose for the first time in three sessions as U.S. crude stockpiles fell for a second week in a row and as data showed OPEC kingpin Saudi Arabia exporting its least to U.S. shores in 35 years in a strident enforcement of the cartel’s production.
Crude inventories fell by 0.679 million barrels during the week ended Nov. 27, the Energy Information Administration said. While the drawdown was less than a third of the 2.358 million-barrel decline expected by analysts, it added to the 754,000 barrel drop in the previous week to Nov. 20.
The Saudis, who lead the Organization of the Petroleum Exporting Countries, appeared to have shipped under 100,000 barrels a day of oil to U.S. refineries in October, the least from the kingdom since 1985, Bloomberg reported.
Tankers from Saudi Arabia take about six weeks to reach either the Gulf or Pacific coasts of the U.S; hence, the delivery of just 73,000 barrels a day to U.S. customers last week, Bloomberg noted, citing the weekly inventory and export data issued by the EIA.
The drop in Saudi crude imports comes against the backdrop of OPEC and its partners struggling to agree whether to walk back from the biggest-ever output cuts made earlier this year. A virtual meeting of OPEC oil ministers on Monday failed to reach an accord on whether to maintain the current level of production cuts, or proceed as planned with a second easing of the restrictions.
New York-traded West Texas Intermediate, the leading indicator for U.S. crude, settled up 73 cents, or 1.6%, at $45.28 per barrel. WTI had consolidated the past two sessions after posting a 27% gain for November, its best since May.
London’s Brent, the global benchmark for oil, finished the session up 83 cents, or 1.8%, at $48.25. For November, Brent rose 28%, its best month since a 95% hike in May from April’s lows.
Oil prices have been on a tear over the past four weeks as breakthroughs in COVID-19 vaccines led to the notion that the world might soon be free of the pandemic.
Wednesday’s rebound, however, came on the back of two negatives in the EIA: higher U.S. crude production and soaring stockpiles of diesel-led distillates and gasoline.
U.S. crude output rose for a second week in a row, crossing 11 million barrels per day, after a 100,000 bpd rise for the week ended Nov. 27.
U.S. gasoline inventories rose by 3.491 barrels last week the EIA said, compared with expectations for a 2.386 million-barrel build.
Distillate stockpiles, which include diesel and heating oil, rose by 3.238 million barrels in the week against expectations for a 0.209 million barrel drop, the EIA data showed.
The gasoline build was typical for this time of year, with fewer people driving or taking road trips with the cold weather, on top of the impact from the Covid -19.
But the build in distillates would, particularly, be troublesome, given the diesel demand for trucking and other delivery services that usually peaks ahead of the holiday season.