Last week’s drop in U.S. crude oil inventories was not just counter-seasonal but counter-intuitive. Don’t oil stocks typically rise in the first quarter? And shouldn’t the country’s production—which is expanding faster than the waistline of an enthusiastic patron of an all-you-can-eat dessert buffet—eliminate the possibility of there being less oil in this country?
Oil inventories dropped 8.6 million barrels (MMbbl) during the week ending Feb. 22, the U.S. Energy Information Administration (EIA) reported on Feb. 27, attributing the reduction to lower imports. The news confounded analysts who collectively expected a 2.8 MMbbl increase. Traders responded by boosting the day’s price of U.S. benchmark West Texas Intermediate (WTI) by $1.44/bbl, or 2.6%.
But markets reacted not only to the EIA’s report, but to Saudi Arabia’s rather cold response to a tweet from President Donald Trump on Feb. 25.
“Oil prices getting too high,” the president tweeted. “OPEC, please relax and take it easy. World cannot take a price hike - fragile!”