EIA crude oil inventories fell to three-year low, U.S. oil rose nearly 2%

The U.S. Energy Information Administration (EIA) said gasoline inventories surged by 7.961 million barrels in the week ended Jan. 7, while refined oil inventories surged by 2.537 million barrels. The strategic petroleum reserve (SPR) inventory decreased by 300,000 barrels to 593 million barrels last week, the lowest since the week of November 15, 2002; the four-week average supply of US crude oil products was 20.792 million barrels per day, an increase of 10.8% over the same period last year ; Excluding the strategic reserve of commercial crude oil imports last week 6.069 million barrels / day, an increase of 185,000 barrels / day over the previous week; crude oil exports decreased by 599,000 barrels / day to 1.955 million barrels / day.

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Financial blog Zero Hedge said that EIA crude oil inventories fell for the seventh consecutive week, Cushing crude oil fell for the first time in two months, and gasoline inventories rose sharply again after a sharp surge in inventories the previous week. Oil prices are off to a positive start in 2022 as oil demand continues to expand and the market tightens as the impact of the COVID-19 pandemic on fuel consumption gradually eases. Crude supplies from OPEC members Kazakhstan and Libya have been disrupted over the past few weeks. We note that the rebound in oil and gasoline has pushed prices above pre-Strategic crude levels, and given the lag in the supply chain, these phenomena suggest that gasoline prices are about to start rising again.

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"Despite the sharp reduction in refining activity, inventories fell more than expected," said Matt Smith, chief oil analyst for the Americas at data firm Kpler. Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said crude oil was in a rose-colored trading atmosphere as investors focused on energy information The bullish signals in the EIA report, such as falling inventories at Cushing, were not a slight softening in implied demand. Currently, both fundamentals and technicals support higher oil prices.

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The Brent contract is in backwardation, with the front-month contract trading around $4.41 above the six-month contract, indicating tight supply in the near term. Earlier, Fatih Birol of the International Energy Agency (IEA) said that demand for omicron was higher than expected after the outbreak of the epidemic, while supply from major oil-producing countries was disrupted. On Tuesday, the EIA Short-Term Energy Outlook showed that it lowered its forecast for global oil inventories in the first quarter from an increase to a slight decline, and that global oil inventories fell by nearly 3 million barrels per day in December.

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On Wednesday, the U.S. dollar index hit a two-month low, falling below the important support level of 95, confirming the next weak trend. Kpler's Smith said a weaker dollar was the main driver of the rise in oil prices, even outpacing the decline in U.S. Energy Information Administration inventories. A weaker dollar has made dollar-denominated oil contracts cheaper for holders of other currencies.