EIA and API show record US crude inventory draws: demand seems to be finally on track


US crude inventory draw - EIA

The anxieties that gripped the crude oil markets may die down in the coming weeks as the US crude oil inventories fell by significant numbers, according to the latest data from the two most prominent agencies in the field.

The latest, from the EIA, US Energy Information Administration, shows an inventory draw of over 6.4 million barrels for the week ending September, 10; it is in sharp contrast to the figure attributed to the previous week by the EIA that was just 1.3 million barrels.

It is not just the EIA that gave out the encouraging figures as far as the crude oil markets are concerned. On Tuesday, the API, American Petroleum Institute, said that the US crude inventories fell by 5.437 million barrels, which was almost twice that of the analysts’ estimates for the same period.

With the data that shows sharp consistency on the demand front, the crude oil markets see the most pressing concern about the state of crude oil use in the world’s top consumer gradually fading into thin air.

The latest data is encouraging, because, the inventory draws of this magnitude did happen when the US Gulf coast was recovering from the flooding disaster caused by Hurricane Ida, followed by a relatively less severe tropical storm.

In addition, the Delta variant of the Coronavirus is still spreading at a level that concerns the authorities.

Since the vaccine drive is in full swing, the impact on the society has been mitigated – and managed well - though.

Although crude oil markets can breathe a collective sigh of relief, the worries over the price taking a steep trend are haunting the policy makers of every major economy in the world.

The fact that those who are in possession of large strategic petroleum reserves going public about tapping them, in this context, is not a threat to the oil producers; on the contrary, it is something that stem from the inevitable necessity that borders on desperation.

With the crude oil prices at current level, the producers no longer see the danger of reaching the dreaded break-even points, as did in the past. They do make profit, despite not being the same as was in the good old days.

All in all, it is good for producers too to play their role in maintaining the current price level by adjusting the collective oil output in proportion to the global demand. Otherwise, unpredictable political interests can skew the market conditions while defying the sane, basic economic rules.

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