Now you see it, now you don’t. Presto chango, and all of a sudden barrels of crude are disappearing at a time when demand is rising, causing a path to global oil supply tightening. Not only did the Energy Information Administration (EIA) shock the market with a 3.5 million-barrel-drawdown, the International Energy Agency (IEA) is lifting its global demand forecast.
There used to be a time when we would draw down crude in December. Well there also used to be a time when we saw a draw of crude when we ran refineries over 16M b/d. Alas, those days are behind us and this is the time of more.
Crude oil prices are once again drifting lower after the API reported another huge build in crude oil stocks late Tuesday afternoon. The API reported a 6.3 million barrels build for the seventh weekly build in a row of builds even as the U.S. refining sector continues to increase refinery utilization rates as they return from the fall maintenance season.
While crude oil trader's talk about the current oil glut, oil and gas demand continues to surprise to the upside. The latest surprise comes from the latest International Energy Agency reports, which once again says that the agency is being caught by surprise by stronger than expected demand.
Crude oil posted its biggest 3-day rally since 1990 and put futures back in bull market territory based on a report that U.S. oil production may be falling faster than previously reported, and OPEC is willing to talk with non-Opec oil producers to try to establish a "fair price for oil."