Oil price goes up as EIA forecasts a decline in oil inventories

  

EIA oil inventories

The EIA, the Energy Information Administration of the US, once again proved its undisputed influence in determining the trend of crude oil price by announcing that the US crude oil stocks has declined.

In inverse proportion to the forecast, the oil price is on the increase significantly relative to what it was a few months ago.

Although there are plenty of factors to worry about that stem from the third wave of the pandemic, the recovery of oil price did not show any sign of being dampened by the bad news.

It is true that the hope of vaccines against the pandemic is rising across the world. Simultaneously, people are aware of the logistical challenges faced by the governments when it comes to distribution. Besides, it will take months before subjecting the whole population to a vaccination drive en masse and measure the combined success.

In this context, it may not just be the progress made on vaccination front that boosted the oil price; the most likely factor could be the decline in the US oil inventories.

Not only did it push the oil price up, but also eclipsed a range of other factors that usually have the potential to bring the price down, ranging from increased production by the OPEC+ nations to looming lockdowns in the Western Europe.

The most surprising aspect of this development is the announcement by another US energy agency to the contrary, just a day ago.

It was the API, American Petroleum Institute, that estimated an inventory build- up in the US, which pushed oil price into a volatile spin in the past few days. 

With the latest report from the EIA that contradicts what API said earlier, oil markets once again found its buoyancy at a time of great uncertainty, highlighting the significance of the EIA data when it comes to crude oil price.

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