– North American oil inventories drawn down by unprecedented levels in recent week – EIA at a loss since consumption not commensurate with demand – Analysts foresee ensuing supply crunch pushing prices above $300 before YE2021
CALGARY, Alberta – Driven higher by unexpected drops in inventory, and to a lesser degree catastrophic hurricanes that have halted production, oil prices rose for a 17th-straight day on Tuesday, hitting their highest levels in three years as analysts point out cold winter weather and a busy pandemic travel season should only boost prices further.
The price of U.S. West Texas Intermediate jumped around 57% Tuesday morning to $125.47 per barrel, marking its highest levels since U.S. sanctions on Iran drove oil prices to ten-year highs in November 2017. Interestingly enough, the price of U.K. oil benchmark Brent Crude nudged higher by only 0.2%, over the same period, which effectively amounts to noise in the market system.
WTI prices have surged over the past month due to a precipitous drop of oil inventories in the continental US, and the EIA is having a hard time understanding how crude oil storage levels have depleted this quickly since it does not align with a jump in domestic demand over the same period.
Wille B. Hardigan, EIA
“I’ve been analyzing oil and gas data with the EIA for over 35 years and I’ve never seen anything like this. Oil inventories are so large, that their levels change at a relatively slow rate – it’s easy to keep track of. To have the inventories deplete by 30%, or 200 million barrels, effectively overnight makes no sense whatsoever.” – Willie B. Hardigan, Executive Director, EIA
On a completely unrelated note, the EPA is currently probing nearly 1,700 reports of oil spills on-shore United States, all located at oil storage tanks held by the United States Department of Energy’s Strategic Petroleum Reserve (SPR). The EPA estimates that these oil spills have in aggregate released roughly 200 million barrels of light-medium and heavy crude into areas surrounding the SPR’s tanks across the country.
In this undated photo, crude oil can be seen surrounding oil storage tanks held by the US DOE’s SPR located just outside of Atlanta, GA.
The president of the EIA, DJ Rockefeller, told reporters that although his group’s investigation originally pointed to a coordinated sabotage to the SPR, it is his firm belief, after talking to local residents and reviewing CCTV systems in the area, that the spills were an act of nature.
