The price of crude oil that had been falling for three successive weeks, received a substantial boost this week from none other than the EIA, the US Energy Information Administration.
The EIA reported a massive crude draw on Wednesday in its weekly report: there was a draw of 12.58 million barrels during the week ending November 25; it's almost 6 times larger than the estimated figure for the same period.
Up until the latest data was released, the correlation between the price of crude oil and the US crude stocks was, more or less, chaotic; it was very difficult to gauge the connection, if any, even with the state-of-the art AI, when the matter in question almost bordered on irrelevance.
The fall of crude stocks this week, however, is so significant that the investors appeared to have managed to breathe a sigh of relief - finally, judging by their response to the news, of course.
As of 16:30 GMT on Friday, the prices of WTI, Brent and LNG were at $81.47, $86.91 and $6.62 respectively. At the end of the day, however, the prices were back in the red on charts with WTI falling below $80 again.
The unexpected spike in crude oil prices for two successive days could have potentially left the OPEC+ in a difficult position: the members are going to meet up virtually on December 4 for their monthly meeting; the decision to change the meeting, in-person as planned earlier to being online later on, has not been accounted for by the group that in turn exposed it to a plethora of interpretations.
Some analysts, for instance, believe it is an easy way of camouflaging the disagreements over further production cuts; those who go as far as being tongue-in-cheek, meanwhile, say that the change of format is just for 'convenience'.
Whatever the reason behind the change of format of the latest meeting, an agreement over a possible production cut still remains in the hypothetical realm in the midst of evolving ground realities; not only did previous cuts anger the powerful nations, but also called into question the mutual loyalties that stem from decades of close diplomatic associations.
In addition to the huge crude draw announced by the EIA, there are other factors that may have played a secondary role in boosting the oil prices in the last two days.
The outbreaks of Covid-19 infections in two major Chinese cities, for instance, appear to have been contained by the Chinese authorities despite the public protests against what the media calls, 'draconian' measures. In addition, the relative weakening of the US dollar may have helped the phenomenon too.
In another development, the EU reluctantly agreed to set a price cap on Russian oil - $60 a barrel - after months of negotiations. The agreement was reached despite the concerted attempts by some members such as Poland to bring it much lower than $60 a barrel on the grounds of depriving Russia of vital revenues to wage the war in Ukraine.
If ratified, with this move, Western insurers will not be able to provide any vessel with insurance cover that carry Russian oil, if the importer in question plans to sell it above the price cap.
The Energy Chief of the EU, meanwhile, wanted India and China, two main buyers of Russian oil, not to pay anything above the price set by the EU: it is highly unlikely, though; the Indian petroleum minister has already unequivocally said where his interests really lay in the energy debate.
Despite the multitude of uncertainties, the oil price rose on Thursday against all odds. On the flip side, there is nothing to celebrate on the economic front, though: the inflation is still rising and so are the anxieties over the energy security; major economies are already in recession or on the brink of entering one.
The fact that oil prices fell again before the close of crude oil markets on Friday, clearly shows the existing volatility in the sector that cannot be easily estimated or gauged.
In this context, analysts wonder if a massive crude draw cannot boost the price of crude oil - and sustain it - what the substitute would be in the coming months that could play the role of the former.
