Crude oil prices rose early Monday in the last trading session of the year ahead of the New Year’s holiday, helped in part by reports on Friday by the Energy Information Administration showing a lower crude inventory build than what the American Petroleum Institute had indicated a day earlier.
West Texas Intermediate front-month crude oil future prices rose 2.1 percent to $46.26 per barrel as of 8:20 a.m. EST, while Brent crude oil futures rose 2.4 percent to $54.50 as of the same time.
On Friday the Energy Information Administration (EIA) released a report that was “much less bearish” than what the American Petroleum Institute (API) had reported on Thursday, an analyst said.
“Although refining activity ticked lower, falling below year-ago levels for the first week since early November, runs remain well above 17 million barrels per day,” Matt Smith, director of commodity research at ClipperData, said.
The official data by the EIA did not confirm “a humongous build for crude stocks” reported a day earlier by the API, he added.
Other than that, “gasoline inventories rose, as is the seasonal trend, while distillates fell — also falling in line with seasonal patterns,” he added.
The report also “showed oil inventories holding at a similar level to the prior week, as stronger imports offset firmer exports,” Smith said.
The report by the EIA published on Friday, which included data as of December 21, showed that the United States crude oil production reached 11.7 million barrels per day, 100,000 barrels more than a week earlier.
“Given equilibrium level fundamentals crude prices appear to react more to sentiment than to fundamentals at this point,” Lakshan de Silva, independent analyst said.
Last week’s trading was marked by high volatility, though usually holiday-shortened weeks see lower trading volumes that also can produce wider-than-normal fluctuations.
There are concerns by investors that the crude oil market is oversupplied. Efforts by the OPEC and Russia to boost prices by agreeing on Dec. 7 to reduce output by 1.2 million barrels per day did not help crude oil recover previous levels.
“Worries surrounding a possible recession in the U.S., along with a trade spat with China, have hurt sentiment for crude prices. Additionally the U.S. has emerged as the world’s top producer of crude this year surpassing both Russia and Saudi Arabia,” de Silva said.
The announcement by the United States of waivers so that eight nations that buy Iranian crude oil could continue to do so, immediately after nuclear-related sanctions announced in May went into effect on November 5, accentuated the rout of crude oil prices. The waivers will expire in March, unless the U.S. renews them.