Oil prices are up sharply in Friday’s session as investors are displaying optimism about the reported 5-million-barrel drawdown in U.S. crude stockpiles last week. The EIA’s reported 5-million-barrel drawdown was much better than the 3.2 million barrel build that analysts had forecast.
Although the total U.S. commercial crude inventory still rests at historically high levels for this time of year, investors know that consistent stockpile drawdowns will be the next step in eliminating the massive global crude oil supply glut that led to the collapse in oil prices in 2014.
The rise in crude prices may also be driven in part by some other oil-related headlines in the news. Later this month, top global OPEC and non-OPEC oil producers will be meeting in Doha to discuss a potential global production freeze.
In addition, a South Dakota oil spill has led to the shutdown of the Keystone Pipeline that delivers hundreds of thousands of barrels of crude oil to Cushing, Oklahoma, on a weekly basis.
Finally, Reuters is reporting that a fire that sources describe as “very bad” has broken out at LyondellBasell Industries NV LYB 3.16%’s Houston refinery that is responsible for 263,776 barrels-per-day of capacity.
All of these headlines could contribute to temporary disruptions in crude production.
Looking Ahead
Despite market optimism, the World Bank sees…
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