By mid-afternoon in New York, crude oil futures for January had advanced 1.34% to $97.30 a barrel. The price was already buoyant before the release of the weekly petroleum status report from the Energy Information Administration (EIA), but pushed higher after the EIA said that crude inventories shrank by 5.59 million barrels, a far larger decrease than had been anticipated.
The draw was driven by high run rates at refineries, with capacity utilisation ramping up to 92.4% last week, a two-month high. Higher refinery activity is expected for this time of the year, as the US winter heating season kicks off once we get into December.
Significantly, stockpiles at Cushing, Oklahoma (the settlement point for WTI crude oil futures on the CME) also decreased last week, the first decline there in eight weeks, dropping 18,000 barrels to 40.6 million.
The price of crude oil had already been supported this week by news that TransCanada filed plans to commence deliveries in early January 2014 from Cushing to the Gulf Coast using the southern stretch of its Keystone XL pipeline.
That could see as much as 700,000 barrels of crude transported each day out of Cushing to refineries in the Port Arthur area, helping to alleviate the Cushing glut which has constrained the price of US crude in recent years.