Deep into the New York trading session, US crude oil futures were trading up 0.26% $107.6 per barrel.
The rise came as the market digested the Energy Information Administration’s weekly Petroleum Status report, which showed stockpiles at Cushing, Oklahoma, the price settlement point for crude oil futures on the Chicago Mercantile Exchange, fell last week, the tenth week in a row in which supplies there have declined.
Supplies at Cushing fell 639,000, despite US crude production rising to 7.75 million barrels a day, the highest rate in 24 years.
Historically, US crude oil prices have been constrained by a glut at Cushing, but improvements in the pipeline network seem to be helping to ease the abundance of oil, with the Cushing stockpile down by nearly a third since June, which is price-supportive.
Refineries continue to operate at higher capacities than we would normally expect at this time of year, a time when the US driving season has wound down and refineries usually begin to be taken down for retooling before winter sets in. Capacity utilisation at refineries was 92.5% last week, up from 91.7% in the previous week, and this is the highest rate seen for this part of the year in seven years. Such high run rates should also help to support the price of crude, all other things being equal.
The overall national drop of 219,000 barrels of crude was smaller than had been anticipated, however, with a Bloomberg poll forecasting a draw of 1 million barrels in crude supplies and with an attack on Syria postponed for the time-being by President Obama, crude could face some headwind in the next few days. The Syria saga appears to be far from over, however, and has the potential to cause volatility to flare up once more.