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Crude oil up on big U.S. crude drawdown, production at five-month low

Crude oil futures scored gains Wednesday after the U.S. reported a much bigger than expected 9.2M-barrel draw on crude stocks for last week, including a 2M-barrel reduction at the Cushing, Oklahoma, delivery hub.
The stockpile draw is attributed largely to an estimated 1M bbl/day drop in U.S. oil production last week as oil wells froze during the Arctic cold blast, which also contributed to a seven percentage-point drop in refinery runs.
U.S. crude production fell to a five-month low 12.3M bbl/day from a record-tying 13.3M bbl/day two weeks ago.
Gasoline stocks rose by 4.9M barrels and demand fell, also a likely result of the winter storms.
The report from the Energy Information Administration is filled with “big numbers and transitory influences,” Kpler analyst Matt Smith told MarketWatch. “The market has been shaken up like a snow globe. It’s going to take a few weeks for everything to settle down.”
North Dakota officials have said it could take a month for oil output in the third biggest U.S. oil producing state to recover after last week’s weather cut production by more than half.
Front-month Nymex crude (CL1:COM) for March delivery closed +0.9% to $75.09/bbl, and front-month March Brent crude (CO1:COM) ended +0.6% to $80.04/bbl, the second highest settlement value YTD for both benchmarks.
Also, the Peoples Bank of China said it will reduce the amount of cash that banks must hold as reserves, a move expected to shore up a sluggish economic recovery.
The U.S. dollar fell to a one-week low against a basket of other currencies, which analysts at energy advisory firm Ritterbusch and Associates said was lending some “bullish momentum” to oil prices.



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