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Crude Moves Higher on Strong Stock Draw; Japan Buys Condensate

David Becker
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Crude oil prices moved higher on Wednesday and continue to remain buoyed following a stronger than expected draw in inventories reported by the Department of Energy on Wednesday. Demand continues to be lacklustre but the US saw its first buyers of crude oil condensate Wednesday which could perk up US crude oil demand.

South Korea and Japan have purchased the first condensate, or ultra-light oil, from the United States since the easing of a 40-year-old ban on U.S. crude oil exports. The U.S. has recently softened a total ban on crude oil exports in place since the Arab oil embargo of the 1970s, allowing energy companies to export a variety of ultra-light oil if it has been minimally refined. Refined products, such as gasoline and diesel, are not restricted.

Prices were buoyed by a larger than expected draw in crude stocks. According to the Energy Information Administration, U.S. commercial crude oil inventories declined by 4.0 million barrels from the previous week. This compared to analysts’ expectations of a climb of 3 million barrel. Gasoline inventories increased by 3.4 million barrels last week, and are in the upper half of the average range. Analysts had expected a 0.5 million barrel climb. Distillate fuel inventories increased by 1.6 million barrels last week but are near the lower limit of the average range for this time of year.

On the demand front, total products demand over the last four-week period averaged over 19.3 million barrels per day, down by 2.0% from the same period last year. Over the last four weeks, gasoline demand averaged 9.0 million barrels per day, down by 1.0% from the same period last year. Distillate fuel demand averaged over 3.8 million barrels per day over the last four weeks, down by 6.2% from the same period last year.

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