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The
monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil ticked
higher for a second month in October (+$0.74), to $46.22 per barrel. The price increase
coincided with a slightly weaker U.S. dollar, the lagged impacts of a 165,000
barrel-per-day (BPD) decrease in the amount of oil supplied/demanded in August
(to 19.8 million BPD), and an advance in oil stocks. The monthly average price
spread between Brent crude (the predominant grade used in Europe) and WTI widened
by $0.07 in October, to $2.21 per barrel.
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The
increases in spot and futures prices were attributed mainly to investors
covering short positions. For the week ended October 23, the U.S. Energy
Information Administration reported an increase of 3.4 million barrels in crude
supplies, well above the increase of 1.6 million barrels forecast by analysts
polled by Platts, but short of the 3.7 million-barrel rise analysts surveyed by
The Wall Street Journal had expected. “It looks like the majority of shorts got
ahead of themselves and were looking for another high single-digit build that
didn’t pan out, so they all ran for the door at once to unwind,” said analyst Tyler
Richey. Greater refinery activity (utilization in late October was pegged
at 87.6% of capacity, compared with 86.4% in mid-October) also pushed prices
higher by increasing the amount of crude used for refining. Finally, crude-oil
imports were also down about 439,000 barrels a day for the week and
petroleum-product stockpiles fell.
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The foregoing comments represent the
general economic views and analysis of Delphi
Advisors, and are provided solely for the purpose of information, instruction
and discourse. They do not constitute a solicitation or recommendation
regarding any investment.
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