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Oil prices soar more than $2 on US crude inventories draw

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By Arathy Somasekhar

HOUSTON (RockedBuzz via Reuters) – Oil prices rose more than $2 a barrel on Wednesday after data showed a larger-than-expected draw in U.S. crude inventories, but gains were capped by a snowstorm expected to hit the travel to the United States.

Brent crude futures for February delivery rose $2.21, or 2.76%, to $82.20 a barrel, while US West Texas Intermediate (WTI) crude futures gained $2.06 , or 2.7%, to $78.29.

U.S. crude stockpiles fell by 5.89 million barrels, according to data from the US Energy Information Administration (EIA), compared with estimates for a decline of 1.66 million barrels. Data from the American Petroleum Institute on Tuesday showed a draw of 3.1 million barrels in the week to Dec. 16, market sources said.

“This report is very bullish, especially with the fact that there is a break-even from the crude oil equation and distillate inventories have broken their build streak before the cold snap,” said Phil Flynn, an analyst at the Price Futures group.

Distillate inventories fell by 242,000 barrels, according to EIA data, compared with analyst estimates for a 336,000-barrel build.

Markets are also awaiting clarification on when the Keystone Pipeline, a major thoroughfare carrying Canadian crude to the United States, will be restarted after TC Energy said it removed the ruptured segment of the pipeline that caused an oil spill across the country. earlier this month and sent it for metallurgical testing as directed by US regulators.

Prices were also boosted by hopes that China would ease some COVID-19 curbs after no new COVID-19 deaths were reported.

China’s crude oil imports from Russia jumped 17% year on year in November as Chinese refiners rushed to secure more cargoes ahead of a cap imposed by Group of Seven nations and an EU embargo from 5 December.

Meanwhile, Saudi Arabia’s energy minister said on Tuesday that OPEC+’s heavily criticized move to cut oil production proved to be the right decision. The comments suggest OPEC+ could continue to maintain tight supply, CMC Markets analyst Tina Teng said.

Potentially reducing oil demand, large parts of the United States are expected to face heavy snow that could cause flight delays and impassable roads during one of the busiest travel times of the year.

Overall, Russian oil exports fell by 11% month-on-month from December 1 to 20 after the European Union embargo on Russian oil came into effect, Kommersant newspaper reported.

(Reporting by Shadia Nasralla, Dmitry Zhdannikov and Rowena Edwards; Additional reporting by Isabel Kua in Singapore; Editing by Kirsten Donovan, Andrea Ricci, David Evans and Alex Richardson)