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US Crude Spikes 2% as Domestic Oil Supplies Take Unexpected Nosedive

February 22, 2018 at 17:56 by Andrew Moran

Oil prices are surging towards the end of the trading week after a new US government report showed an unexpected nosedive in US crude stockpiles. This surprised traders because the market had anticipated a significant increase.

April West Texas Intermediate (WTI) crude futures rose $1.34, or 2.17%, to $63.02 per barrel at 16:37 GMT on Thursday on the New York Mercantile Exchange.

Brent, the international benchmark for oil prices, is also rallying. April Brent crude futures jumped $0.84, or 1.28%, to $66.26 a barrel on London’s ICE Futures exchange.

Year-to-date, US crude prices had advanced nearly 5%, while Brent crude has risen just 0.50%.

According to the US Energy Information Administration (EIA), domestic crude stocks declined by 1.6 million barrels for the week ending February 16, while output was flat at 10.3 million barrels per day (bpd). Gasoline stockpiles rose 261,000 barrels, while distillate stockpiles tumbled by 2.4 million barrels.

This occurred despite refinery maintenance season commencing. Industry observers are attributing the decrease to an increase in crude exports; a supertanker cargo in the Gulf Coast initiated its first export recently.

Crude further benefited from a weaker US dollar as the greenback slipped 0.48%. A falling buck is better for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase. This has been quite important for oil since 2015 when the federal government removed a 40-year ban on oil exports, shipping them to more than 30 countries.

Moreover, the latest Baker Hughes oil rig count stands at 798.

In other energy markets, April natural gas futures slid $0.012, or 0.45%, to $2.647 per million British thermal units. April gasoline futures climbed $0.018, or 0.67%, to $1.76 per gallon, and April heating oil futures advanced $0.023, or 1.23%, to $1.95 a gallon.

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