Now you see it. Now you don’t. Presto, change-o the U.S. oil glut has disappeared. Low crude prices and a booming global economy have caused the biggest oil glut in history to disappear before your very eyes. The American Petroleum Institute reported another massive 5.121 million barrels drop in U.S. crude supply dragging stockpiles back to the lower end of the average range for this time of year.
On Tuesday, crude oil hit a fresh 2018 high of $64.89 per barrel, but then reversed and declined very quickly, erasing most of Friday increase. What encouraged oil bears to act and how did this decline affect the short-term picture?
The Energy Information Administration (EIA) released another EIA Drilling Activity report that raised its estimates for shale oil production without considering the realities on the ground. According to the report, the EIA says that U.S. shale oil production will increase by 111,000 barrels a day to 6.55 million barrels a day in February next month, and that production in the Permian Basin will surge by 76,000 barrels a day.