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Drawdown in Crude Could Be a Longer-Term Encouraging Sign

Crude inventory data continues to show more drawdowns as crude has recovered from August lows.

Crude inventory data continues to show more drawdowns as crude has recovered from August lows. The EIA (Energy Information Administration) reported a drawdown of about 2 million barrels for a second week in a row, while gasoline showed a large build. Luke Rahbari of Stutland Volatility Group tells TheStreet’s Jill Malandrino that the data is encouraging regarding the crude drawdown and is offsetting some of the concerns over weakness in demand out of China, the world’s second largest consumer of the crude oil. In addition, production expectations for 2016 have been lowered, which also helps ease the supply glut. Crude oil production is forecast to continue decreasing through mid-2016 before growth resumes late in 2016, according to the EIA. Rahbari believes that we will see sector rotation into energy-related stocks as 2015 closes out as investors take advantage of tax losses and hunt for values in MLPs (Master Limited Partnerships) with structured paper and debt deals.

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