02:52 PM EST, 11/17/2021 (MT Newswires) -- West Texas Intermediate (WTI) crude oil fell 3% to a six-week low on Wednesday even after the Energy Information Administration reported an unexpected drop in U.S. inventories as concerns the United States will release supply from its strategic reserves to cool high gasoline prices linger.
WTI crude for December delivery closed down US$2.40 to US$78.36 per barrel, Marketwatch reported, the lowest since Oct.8. January Brent crude, the global benchmark, was last seen down US$2.45 to US$79.98, while Western Canada Select was down US$2.25 to US$59.76 per barrel.
The drop came even after the Energy Information Administration reported U.S. oil inventories fell by 2.1-million barrels last week, while the consensus analyst estimate called for 1.4-million barrel rise, according to a Reuters poll.
However the report showed a rise in stocks at the Cushing, Oklahoma, storage hub and a 3.2-million barrel draw from the strategic petroleum reserve (SPR), spooking traders who are concerned the Biden Administration will release supply from the reserve to bring down prices, particularly after reports the U.S. President raised the issue with his Chinese counterpart at a virtual summit this week.
"The big 3.2 million draw was the largest at the SPR since the IEA green lighted the release of barrels from global SPRs during the Libyan Civil War. The big draw at the SPR played into spec fears around the SPR that hit the market earlier in the session after it came to light that a potential release of Strategic Petroleum Reserve oil was raised by the US during this week's virtual summit between President Biden and President Xi Jinping, according to the South China Morning Post," Robert Yawger, director of energy futures at Mizuho Securities USA, said in a note.