Oil prices rose surged on Wednesday following a decline in Cushing, Okla storage hub. The crude stocks at the facility fell to the lowest level since early 2020.
The increase in oil prices comes amid the first rise in the US weekly oil inventories since mid-May.
The Energy Information Administration (EIA) on Wednesday reported that the U.S. crude inventories rose by 2.1 million barrels for the week ended July 16 – the first weekly rise in nine weeks.
The data also showed that crude stocks at the Cushing, Okla., storage hub declined by 1.4 million barrels for the week to 36.7 million barrels – the lowest record in the storage hub since January 2020.
Brent Crude price is up 4.14% to $72.22 per barrel as at 16:41 GMT on Wednesday, while US oil Western Texas Intermediate is up by 3.11% to $70.31 per barrel.
Western Canadian Select is up by 5.76% to $57.11. Natural gas is also up 1.86% to $3.948.
Nigerian banner oil, Bonny Light traded at $68.34 per barrel.
The market is starting to realize that the overall situation is “still very tight,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.
“We did see a big surprise surge of imports and that kept the market somewhat at bay but if you look at the draw in Cushing, Oklahoma, we’re getting to a dangerously low level,” he said. “We’re almost out of oil at the Cushing delivery point if we continue to draw at this rate.”
The market has been “draining” crude stocks in storage at Cushing at an “incredible pace — it’s unbelievable,” said Flynn. Stocks may fall “below the minimum operating levels for that storage point pretty soon.”
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.