Oil price: WTI crude rallies as EIA reports fall in US inventories

on May 22, 2014
Updated: Oct 21, 2019

_iNVEZZ.com: Thursday, May 22:_

**Crude Oil Price**
West Texas Intermediate (WTI) rose to over $104 a barrel yesterday, its highest level in over a month, after the Energy information Administration (EIA) announced an unexpected fall in US crude oil inventories.
The EIA, which produces the official US government energy statistics, reported that oil inventories fell 7.23 million barrels in the week to 16 May, to a total of 391.3 million — about 4.1 percent above the EIA’s five-year average. This compared to a Reuters poll of analysts that pointed to a rise of 600,000 barrels and a Bloomberg News survey which suggested no change in the level of inventories. On Tuesday the API, the largest US trade association for the oil and natural gas industry, said crude supplies fell by 10.3 million barrels last week.

The EIA also revealed that US crude imports fell 658,000 barrels a day (b/d) last week to reach a 17-year low of 6.47 million b/d. US oil output climbed by 6,000 b/d to 8.43 million b/d, the highest level since October 1986. The EIA also reported that the US refinery utilization rate declined 0.1 of a percentage point to 88.7 percent of capacity, below expectations of a 0.5 percentage-point rise. The dynamics of the market have been driven by a recent jump in US production of unconventional oil from shale using a combination of horizontal drilling and hydraulic fracturing, or fraccing.

“This was a strongly bullish report,” Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Massachusetts, told Bloomberg. “Imports were very low, and we’ll be waiting to see if next week’s report shows that a couple of tankers were delayed.”

Meanwhile, in further bullish news for oil today, HSBC’s May flash manufacturing purchasing managers’ index (PMI) for China surged to a five-month high of 49.7, surpassing the bank’s final reading of 48.1 for April. This indicated a brighter outlook for demand in the world’s second largest oil consumer.
“This is positive for oil markets, because better-than-expected factory orders will increase demand for oil. And coupled with commentary from the Fed overnight, oil prices will be supported for the time being,” said Ben Le Brun, market analyst with OptionsXpress in Sydney, as quoted by Reuters.
Yesterday, the price of Brent crude reached $110.73 a barrel at 16:40 BST, the highest level since early March. Right now it is trading at $110.43.