Yahoo Finance Oil Soars on Cocktail of US Pipeline Closure, Gasoline Squeeze and Inflation Spike
By Barani Krishnan and Liz Moyer
Investing.com — Oil markets edged higher for a fourth day in a row on Wednesday as the gasoline price at U.S. pumps hit seven-year highs of around $3 per gallon and the government reported that inflation was roaring at levels last seen in 2008.
The combined concerns over tight fuel supplies and price pressures to the upward made traders almost completely ignore a smaller-than-expected drop in weekly crude supplies and the first production build in two months.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up 80 cents, or 1.2%, at $66.08 per barrel. WTI is up almost 1.4% on the week.
London-traded Brent, the global benchmark for crude, finished up 77 cents, or 1.1%, at $69.32.
The run-up in crude prices came as U.S. oil industry executives pleaded with Americansnot to hoard fuel, saying there would be adequate gasoline for all without the panic buying that has broken out with the shutdown of the Colonial Pipeline, country’s largest fuel delivery system.
Colonial delivers about 45 percent of the fuel consumed on the US East Coast. Its shutdown since Friday due to a cyberattack has left many fuel stations in the region without supply, forcing motorists to hunt for gasoline anywhere they could find.
Social media has highlighted tales of people trying to fill their tanks even when they had adequate supply, causing massive long lines at pumps that were still working.
Earlier in the day, the Labor Department reported that the U.S. Consumer Price Index grew by 4.2% over a one-year period in April for its largest increase in almost 13 years, confirming a huge tick up in inflation after months of commodity price increases in an economy rapidly recovering from the coronavirus pandemic.
“After digesting a larger-than-expected inflation report, crude prices pushed higher despite a stronger dollar as expectations grow that global crude demand recovery will be very strong in the second half of the year,” said Ed Moya, analyst at online broking portal OANDA.
“The path for crude prices appears to be higher but until the situation improves in India, WTI will probably struggle to break above the early March high.”
India, the world’s third largest oil buyer facing carnage from the coronavirus, might have a virus variant that could be more infectious than the original Covid-19, the World Health Organization warned.
Earlier on Wednesday, the Energy Information Administration reported a smaller-than-expected decline in crude stockpiles.
Crude oil inventories fell 427,000 barrels last week, compared with analysts' expectations for a draw of 2.817 million barrels.
{ecl-485||Gasoline inventories}} rose 378,000 barrels last week the EIA said, compared with expectations for a draw of 600,000 barrels.
U.S. crude exports, meanwhile, fell to 1.8 million barrels per day last week from a record 4.1 million bpd in the previous week.
US crude production also rose by an estimated 100,000 barrels daily, returning to the 11 million barrels per day mark for the first time in two months, the EIA said,
The only positive number in the weekly dataset was the line for distillate stockpiles, which include diesel and heating oil. This fell 1.733 million barrels in the week against expectations for a draw of 1.080 million barrels.
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