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By the Oil Risk Management Team at A/S Global Risk Management

The weekly oil inventory report from the EIA confirmed Wednesday's API data with huge draws in crude oil and gasoline stocks.

U.S. crude oil stocks were reduced by a whopping 14.5 mio. barrels (API = 12 mio.), the biggest weekly drop in around 14 years. Gasoline stocks were reduced by 4.2 mio. barrels. Distillates grew by 3.4 mio. barrels, which is a larger-than-expected build. Initial market reaction was a spike in oil prices, then a minor decrease to the current price level (Brent around $49.5 at time of writing). Tonight's weekly oil rig count from Baker Hughes will be followed closely; last week saw 1 new active oil rig to a total of 407.

Adding to the bullish sentiment is news of Iranian output stagnating for the third month in a row around 3.63 mio. barrels per day in August. The country raised output sharply after the lifting of international sanctions in January and has declared that it will not agree to any output freeze/curb deal before output reaches (at least) 4 mio. barrels per day.

The news does not bode well for the outcome of the OPEC/non-OPEC meeting later this month in Algeria where Saudi Arabia likely requests that all parties join in if an output freeze agreement is to become more than talks.

Turning to economic data, central bank comments takes centre stage. Yesterday, the European Central Bank decided to leave all policy rates and bond buying program unchanged; today there is a couple of Fed member speeches.

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A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.