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Oil Makes Solid Gains After EIA Reports Big Weekly Crude Supply Drop

June 27, 2018 at 15:41 by Matt Jackson

The USA’s Energy Information Administration reported that there had been a decline in oil supply of 9.9 million barrels for the week ending June 22. This represents the largest weekly decline of the year, and has caused a sizeable rally in the market with both WTI and Brent achieving gains of more than 2% for the day. The American Petroleum Institute reported a drop of 9.2 million barrels earlier in the week.

The Energy Information Administration is a statistical agency that is responsible for collecting, analyzing, and publishing data on energy sources including oil, gas, and petroleum. Their weekly report includes details on the size of the USA’s stockpile of crude, as well as import figures. It is very important to the market, giving a snapshot of how the global oil industry is performing. As such, it can positively or negatively impact the price of oil. An increase in supply means that prices will usually drop, while a decrease causes prices to rise. Analysts attempt to predict the loss or gain in the days prior to the report being published, and an accurate analysis means that there is little surprise and, therefore, only minor market movements.

This week, analysts had predict a decline of just over 2 million barrels, so the actual drop was much larger, and has had a similarly large effect on prices.

The drop in supply has overshadowed the ongoing trade dispute between the USA and the rest of the world, and has been backed up by the news from Libya that control of the country’s oil could become locked in after being handed to Eastern ports, which do not have the right to export.

WTI crude prices rose 2.89% to $72.57 and Brent crude oil rose 2.14% to reach $77.77 at 16:30 GMT.

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