Fortune released an article today entitled Here’s Why Oil Prices Just Hit a 2016 High …with West Texas Intermediate (WTI) closing at $45.33 and Brent Crude closing at $47.34 per barrel according to Bloomberg Energy today, I was also wondering the same thing.

Fortune’s answer is simple, “[i]t has to do with a surprise drop in U.S. crude stockpiles.”

According to Fortune, Brent and WTI benchmarks rose more than 4% after the American Petroleum Institute (“API”) reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week.

The API report is a precursor to official inventory data from the U.S. Energy Information Administration (“EIA”). So what does the EIA have to say about it?

“This Week in Petroleum” was released by the EIA today entitled Crude Oil Price Rise and Contango Narrows, but High Inventories Should Constrain Further Price Increases – the full text and EIA diagrams of its analysis can be found here.

The EIA’s analysis says the following:

  • Global crude oil prices in April rose in response to near-term supply concerns and a more positive economic outlook that suggests rising demand for crude oil.
  • The stronger crude oil demand outlook is likely the main reason for higher crude prices across the entire futures curve, whereas the near-term supply concerns are putting additional upward pressure on prices for near-term delivery.
  • As a result, the futures curve for crude oil has both shifted since the beginning of the month and flattened out
  • Recent supply disruptions are likely to be affecting oil markets; such as the oil workers’ strike in Kuwait immediately followed the Doha meeting, OPEC’s unplanned crude oil supply disruptions with production outages increasing in places like Nigeria, Libya, and Iraq, and non-OPEC supply was also lower because of outages in Brazil and Ghana.

In addition, Fortune suggests that Tuesday’s oil rally was also said to be underpinned by a weaker dollar.

Fortune also points out that “[o]il prices are headed for a fourth straight week of gains, with Brent on track to finish April 17% higher for its best monthly gain in a year, despite aborted plans by major producers to agree on an output freeze at a meeting in Qatar earlier this month.”