Crude oil futures were seen erasing some previous gains to turn higher last week. The turnaround came on Thursday after the weekly crude oil inventory report showed a larger than expected draw on stockpiles.
Data from the Energy Information Administration (EIA) showed that crude oil stockpiles fell by 1.6 million barrels. This was against the estimates that showed a 1.9 million barrel of crude oil build up. Crude oil prices rise briefly over 1.50% on the day after the bullish report. The data also showed a minor build up in gasoline inventories and covered the week ending February 16.
The drawdown on the crude oil stockpiles was the first in nearly four weeks. EIA said that at 420.5 million barrels, crude oil inventories are lower than the seasonal average. The report managed to encourage oil bulls to bid up the prices.
Gasoline production according to the EIA was higher during the week at 10.1 million barrels per day, compared to 9.6 million barrels per day from the previous week.
The bullish report caused a crude oil prices rise which was earlier capped by a stronger U.S. dollar. Oil prices slipped on Wednesday last week after the FOMC meeting minutes showed a hawkish tinge, sending the USD higher on the day.
Earlier in the week, data from the American Petroleum Institute showed that a drawdown in crude oil stockpiles by 907,000 barrels. While the numbers differed from the report from the EIA, both the reports confirmed that U.S. crude oil consumption had increased.
U.S. exports first shipment of Crude oil to Asia
Last week, the U.S. crude oil market hit a major milestone as the first supertanker left the U.S. shores exporting crude oil to Asia. Tom Shaw, president of the Louisiana Offshore Oil Port said that there wasn’t a better time to offer the crude oil export as domestic production was set to surpass 10 million barrels a day.
The United States lifted restrictions on crude oil exports only in late 2015 and the WTI and Brent oil spreads also helped to make the exports more profitable.
The U.S. has been on a path to become less reliant on international crude oil imports and the recent inroads made by the U.S. shale oil producers was one of the reasons for the OPEC nations to have opened the supply taps sending oil price plunging to historic lows.
The VLCC (Very large crude carrier) that left the U.S. shores last week carried 2 million barrels of crude oil to Asia where demand is expected to rise in the coming years.
The crude oil exports to Asia accounted for 35% of the total U.S. oil exports during the eight months in 2017, data from the Energy Information Administration (EIA) showed as exports increased to 40% in the months of September and October.
Crude oil production in the U.S. is expected to grow alongside an increase in exports as well.
For the week, crude oil prices were seen retracing the losses. WTI Crude oil was seen initially posting a high at $66.00 a barrel before prices fell sharply to $59.00 a barrel. However, oil prices managed to brave the stronger dollar, supported by the better than expected inventory report.
From a technical outlook, WTI crude oil prices could be seen extending the gains towards the resistance level at 63.82 – 63.36 level which previously served as support. A retest of resistance at this level could confirm the downside as oil prices could slip back to the $58.50 level.