Oil Futures Soar on Wednesday as Data Reveals Large Reduction in U.S. Crude Oil Supplies

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Oil traders finally got the long awaited news of a surprise massive drop in crude oil stockpiles resulting in a 15-month high settlement on Wednesday, according to Bloomberg MarketWatch.

November West Texas Intermediate crude soared $1.31, or 2.6%, to settle at $51.60 a barrel on the New York Mercantile Exchange, marking its highest settlement since July 14, 2015. The November WTI contract expires at Thursday’s settlement.

December Brent crude, the global benchmark, rose 99 cents, or 1.9%, to end trading at $52.67 a barrel on London’s ICE Futures Exchange, marking its highest finish in over a week.

Earlier on Wednesday, the U.S. Energy Information Administration reported that U.S. crude oil supplies dropped by a staggering 5.2 million barrels in the week ending October 14. Analysts polled by S&P Global Platts expected a 2.5 million-barrel climb, while a decline of 3.8 million barrels was reported by the American Petroleum Institute late Tuesday.

John Macaluso, an analyst at Tyche Capital Advisors, said the extended outage of Plains All American’s Basin pipeline, which is capable of delivering almost nearly 500,000 barrels a day of Permian crude into Cushing, Oklahoma contributed to the surprise decline in crude stocks.

Domestic crude oil supplies have now dropped 26.5 million barrels since the beginning of September, according to Troy Vincent, an analyst at ClipperData. Over the same period last year, crude oil stocks built by 12.9 million barrels as reduced refinery runs “allowed stocks to swell,” said Vincent.

Meanwhile, November natural gas contracts slumped, falling 9.3 cents, or 2.9%, to end trading at $3.17 per million British thermal units on the New York Mercantile Exchange. The EIA’s weekly supply update on natural gas will be revealed on Thursday.

 

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