The draw in oil reserves surprised even the most bullish oil analysts. From OilPrice.com:
This week the American Petroleum Institute reported a “shockingly” high draw of 7.6 million barrels of oil despite expert predictions that U.S. supplies would increase by 1.5 million units in the wake of multiple draw weeks, according to Zero Hedge.
The report marks five straight weeks of draws in a season that is typically marked with lower demand and consequential supply builds. The news caused West Texas Intermediate prices to spike above $49 shortly after the numbers were released.
Some analysts now see crude oil demand growing in the United States, after many months of waning appetites:
Demand is rising,” Phil Flynn, senior market analyst at Price Futures Group said. “We are seeing the U.S. market get in balance a lot quicker than anyone thought.”
Next on tap for oil investors is today’s Energy Information Administration (EIA) report, which has the propensity to either fuel oil’s continued rebound, or send it crashing back to earth. For now, investors are betting on the former.
The VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:UWTI) rose $1.51 (+6.02%) to $26.60 per share in premarket trading Wednesday. Year-to-date, UWTI has still fallen 36.5%.