By Barani Krishnan
Investing.com – Oil bulls scored a ninth straight winning week as market attention again turned to the three-year lows in inventories at the U.S. storage hub for crude, even as natural gas and coal prices that supported a recent broad rally in energy turned lower on the week.
U.S. crude’s West Texas Intermediate benchmark settled up $1.26, or 1.5%, at $83.76 per barrel. WTI fell to as low as $80.81 on Thursday but on Friday it reached a peak of $83.86, just a dime below Thursday’s seven-year high of $83.96. For the week, it rose 1.8%, for a cumulative nine-week gain of 34%.
London-traded Brent crude, the global benchmark for oil, settled up 92 cents, or 1.1%, at $83.53. Brent hit a three-year high of $86.10 on Thursday. It rose almost 1% on the week for a seven-week gain of 15%.
Crude prices had their steepest drop in two weeks on Thursday after Russian President Vladimir Putin said the OPEC+ cartel which includes Moscow might put out more barrels than it has announced.
Oil prices were also down as China, India and other consumers fought back against high energy prices which they said could ruin their economies with runaway inflation. Adding to the pressure on energy markets were forecasts showing much of the United States will have a warmer-than-average winter.
Those factors had caused natural gas and coal prices to unwind from their highs of recent weeks.
Still, oil markets rebounded strongly on Friday as the focus returned to plummeting inventories at the Cushing, Oklahoma, storage hub for crude.
“The issue is that there is not going to be any opportunity to restock Cushing in the next 3-5 months as runs should stay high,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, North Carolina. “But it will be a volatile trade.”
In its weekly inventory update on Wednesday, the U.S. Energy Information Administration put the Cushing stocks at 31.2 million barrels, down from the previous week’s three-year low of 33.6 million.
On top of that, the EIA reported that crude stockpiles declined by 431,000 barrels in the week to Oct. 15, compared with analysts’ expectations for a build of 1.857 million barrels.
It was the first time in a month that the EIA had reported a weekly drop in crude stocks after the previous back-to-back builds that added about 13 million barrels to inventories.
Crude wasn’t the only component of the report to register declines.
Gasoline inventories fell by 5.368 million barrels, the EIA said, compared with expectations for a draw of 1.267 million barrels.
Stockpiles of distillates, which include diesel and heating oil, slid by 3.913 million barrels in the week against expectations for a draw of 700,000 barrels, the inventory report showed.