Stocks

Oil Prices Rise After Surprise

Earlier this morning, oil looked like a loser. And then the Energy Information Administration, at 10:30 a.m., reported that U.S. crude supply fell by 1.7 million barrels, ending a six-week streak of increases.

Earlier this morning, oil looked like a loser. And then the Energy Information Administration, at 10:30 a.m., reported that U.S. crude supply fell by 1.7 million barrels, ending a six-week streak of increases.

12:43 p.m. Earlier this morning, oil looked like a loser. Since then, crude prices have spiked higher after U.S. supply data were released.

WTI crude, the U.S. oil benchmark, was languishing near down more than 1% at $53.50 at 9 a.m. Then, for some reason, it started rising. There had been positive chatter about OPEC considering deeper production cuts yesterday, but that had faded away by Wednesday morning.

And then the Energy Information Administration, at 10:30 a.m., reported that U.S. crude supply fell by 1.7 million barrels, ending a six-week streak of increases. Supply was expected to increase by 4.7 million barrels. And that caused another spike in oil prices, this time to about $55. It was up 1.5% at $55.30 at 12:22 p.m.

https://asset.barrons.com/dynamic-insets/charts/cdc_a7f5075c93a75ba7235fe974.json

“While there were only a few economic releases on tap today, the weekly crude oil inventories number triggered heavy trading in the energy sector,” writes Gorilla Trades strategist Ken Berman. “The price of crude oil hit a more than three-week high thanks to the surprising inventory draw.”

Today’s move does little to change oil’s trajectory, however. Since May 20 or so, oil has been rangebound with $64 serving as the ceiling, and $51 as the floor.

https://asset.barrons.com/dynamic-insets/charts/cdc_7d06eabe841d3aba2334e6e7.json

Energy stocks don’t need oil pries to break out to have a good day, however. The Energy Select Sector SPDR ETF (XLE) has gained 1% to $59.37, well ahead of the Dow Jones Industrial Average, which has advanced 0.1%, and the S&P 500, which has risen 0.2%.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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