CORRECT: Crude Rallies On Large US Stock Drawdown

Oil prices rose around a percent on Wednesday after the EIA reported a strong US crude inventory drawdown. Stocks and refining are likely to normalise though over coming weeks as temperatures have improved. Plans for stimulus to support growth in China also provided support to crude, as did the lower US dollar (USD index -0.4%).

• WTI rose 1.3% to $75.36/bbl but has started APAC trading slightly higher at $75.42. It reached a high of $75.83 following the EIA data, approaching the bull trigger at $76.31, December 26 high. It reached a low of $73.94 before the data.
• Brent traded above $80 through most of the NY session and finished up 0.9% at $80.23. It rose to $80.73, close to resistance at $80.75, following the US stock data, after a low of $79.05. A break of initial resistance would open up $81.45, key resistance.
• The EIA reported a 9.23 mn barrel or 2.2% stock drawdown, a lot more than expected, as freezing temperatures resulted in cuts to production and difficulties in unloading imports (US imports of Saudi oil fell 80% last week). The weather also impacted refining with refinery utilisation down 7.1pp, and reduced driving resulting in a gasoline inventory build of 4.91mn but distillate fell 1.42mn.
• Disruption to US output from the cold snap is easing with the impact in North Dakota now at 170-220kbd, according to the pipeline authority.