U.S. oil inventories plummeted, and Goldman Sachs predicted crude oil would soar to $115 again

U.
S.
oil inventories are rapidly declining

U.
S.
commercial crude inventories fell 3.
1 million barrels to 436.
8 million barrels as of Oct.
28, gasoline inventories fell 1.
3 million barrels to 206.
6 million barrels, and distillate inventories rose 400,000 barrels to 106.
8 million barrels
, the U.
S.
Department of Energy reported on Nov.
2.
U.
S.
crude oil, gasoline and distillate inventories fell 3%, 6% and 19%,
respectively, from the same period in the past five years.

Jeff Currie, head of commodity research at Goldman Sachs, reported that due to the tight supply in the oil market, the price of Brent crude oil is expected to reach more than $115 per barrel by the end of the first quarter of 2023
.

Andy Lipow, president of Lipow Oil Associates, said U.
S.
crude inventories are at the lowest level in the same period in the past five years, raising concerns about whether there will be enough oil supply
in the market if the U.
S.
government's release of strategic oil reserves ends.

In addition, OPEC production cuts have also added to market concerns
.

OPEC crude production fell 20,000 barrels per day to 25.
33 million barrels per day in October 2022 from the previous month, a shortfall of 1.
36 million b/d
from the quota pledged in the OPEC+ production agreement, Reuters polled Nov.
2.

Angolan, Nigerian and Kuwaiti crude production fell by 40,000 barrels per day in October, 30,000 barrels per day and 09,000 barrels per day, respectively, while Iraqi and Algerian crude production increased by 50,000 barrels per day and 10,000 barrels
per day, respectively.

The US Federal Preparatory Council (Fed) raised interest rates by 75 basis points in one breath, Chairman Powell issued hawkish remarks, and US stocks closed heavy losses, but international oil prices still rose today to maintain their rally, rising to a three-week high, and fuel inventories continued to tighten
.

The New York Mercantile Exchange West Texas Intermediate crude for December delivery rose $1.
63 to $
90 a barrel.

London North Sea Brent crude oil for January delivery rose $1.
51 to $
96.
16 a barrel.

As an indicator of demand, U.
S.
oil supply averaged 20.
3 million barrels per day over the past four weeks, down 0.
5% from the same period last year; Among them, the average daily supply of gasoline decreased by 8.
2% to 8.
6 million barrels, the average daily supply of distillate oil increased by 5.
1% year-on-year to 4.
1 million barrels, and the average daily supply of aviation kerosene increased by 0.
7% to 1.
481 million barrels
.

In addition, the midterm elections in the United States have also sharply volatile
oil prices.

Recently, it is close to the midterm elections in the United States, inflation in the United States is still at a high level, and US President Biden has also used the strategic oil reserve as much as possible for the polls of the midterm elections to suppress crude oil prices before the midterm elections, but the recent OPEC+ production cuts and the GDP data released by the United States itself have also made the price of crude oil in a range
.

Among them, the US special envoy for energy security said that the United States needs to buy back 200 million barrels of oil in the future to replenish the strategic oil reserve, so after the midterm election, it is necessary to observe whether SPR stocks begin to pick up and whether economic growth causes a recession
due to interest rate hikes.

In addition, there is the issue of inflation, the Fed's sounding board, Wall Street Journal reporter Nick, in the Fed's quiet period passed twice, the first time said that some officials believe that after the November rate hike, December may slow down the rate hike dovish, the second said that because unlimited quantitative easing (QE), the financial situation of households and businesses is unusually strong, making the Fed's work to suppress high inflation more difficult, the Fed may continue to raise interest rates hawkishly
.

To sum up, the trend of crude oil may intensify the volatility
before the midterm election.