EIA Crude Draw Extends Oil Rally

By Published On: February 11, 2021Categories: Daily Market News & Insights

February has been a crummy month for folks who like low fuel prices, with prices climbing each trading day of the month. Crude oil has gained $6/bbl, diesel is up 15 cents, and gasoline is up 8 cents – all in less than two weeks. Corporate fuel buyers may see this as a mixed bag; while high prices drive up operating costs, it also signals an improving economic situation, meaning revenue and profits are returning also. With prices rising, and Goldman Sachs calling for $65/bbl crude by midyear, fuel buyers are actively evaluating risk mitigation strategies to prevent spiking prices.

Yesterday’s rally continuation was spurred by the EIA. The EIA’s weekly report confirmed a hefty 6.6 million barrel crude oil draw, which gave the markets more fuel to continue their string of gains. Seasonal fog in Houston caused imports to slow, causing much of the crude draw to occur in the Gulf Coast. On the flip side, gasoline posted a huge inventory build, which kept gasoline’s price gains muted. Gasoline’s build was spurred largely by winter storms in the northeast, which kept consumers in doors (and burning heating oil). Refiners increased their utilization a bit last week to 83%, contributing to the crude draw.

The EIA released their monthly update yesterday, and they updated their WTI price forecast for the year to be $50.21. The agency expects that Q1 will see prices continue moving higher before slowing down mid-year. They also forecast that the supply/demand balance will tighten after Q1, resulting in minimal changes in global inventories. For the full report, click here.

Crude prices are once again trading lower this morning, though that doesn’t guarantee today won’t end with yet another price gain. Several times over the past two weeks, early morning losses turned into bullish gains. Crude oil is currently trading at $58.51, down 17 cents.

Fuel prices are mixed this morning. Diesel, like crude, is experiencing small losses, trading down -0.2 cents at $1.7593. Gasoline, which has lagged the market this week, is trading at $1.6590, up 0.6 cents.

This article is part of Daily Market News & Insights

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