The anxieties that gripped the crude oil markets may
die down in the coming weeks as the US crude oil inventories fell by
significant numbers, according to the latest data from the two most prominent
agencies in the field.
The latest, from the EIA, US Energy Information Administration,
shows an inventory draw of over 6.4 million barrels for the week ending
September, 10; it is in sharp contrast to the figure attributed to the previous
week by the EIA that was just 1.3 million barrels.
It is not just the EIA that gave out the encouraging
figures as far as the crude oil markets are concerned. On Tuesday, the API,
American Petroleum Institute, said that the US crude inventories fell by 5.437 million
barrels, which was almost twice that of the analysts’ estimates for the same
period.
With the data that shows sharp consistency on the
demand front, the crude oil markets see the most pressing concern about the
state of crude oil use in the world’s top consumer gradually fading into thin
air.
The latest data is encouraging, because, the
inventory draws of this magnitude did happen when the US Gulf coast was
recovering from the flooding disaster caused by Hurricane Ida, followed by a
relatively less severe tropical storm.
In addition, the Delta variant of the Coronavirus is
still spreading at a level that concerns the authorities.
Since the vaccine drive is in full swing, the impact
on the society has been mitigated – and managed well - though.
Although crude oil markets can breathe a collective
sigh of relief, the worries over the price taking a steep trend are haunting
the policy makers of every major economy in the world.
The fact that those who are in possession of large
strategic petroleum reserves going public about tapping them, in this context,
is not a threat to the oil producers; on the contrary, it is something that
stem from the inevitable necessity that borders on desperation.
With the crude oil prices at current level, the
producers no longer see the danger of reaching the dreaded break-even points,
as did in the past. They do make profit, despite not being the same as was in
the good old days.
All in all, it is good for producers too to play
their role in maintaining the current price level by adjusting the collective
oil output in proportion to the global demand. Otherwise, unpredictable
political interests can skew the market conditions while defying the sane,
basic economic rules.
