Now you see it. Now you don't. Presto, change-o the U.S. oil glut has disappeared. Low oil prices and a booming global economy has caused the biggest oil glut in history to disappear before your very eyes. The American Petroleum Institute reported another massive 5.121 million barrels drop in U.S. crude supply dragging stockpiles back to the lower end of the average range for this time of year. The historic drop in U.S. crude supply continues as strong demand, a drop in U.S. Imports at a time when our exports are at a record high, and OPEC production cuts show up in the global market. Now with strong data out of China over night and cold weather across the U.S. we are seeing the biggest drain ever from peak to valley, as Energy Report readers knew would happen. We are seeing a global oil demand surge and we are seeing more rising geo-politcal risk and an oil market that is showing signs of ignoring technical pullback signals. 

Supply also fell again in the NYMEX delivery point in Cushing Oklahoma as weather related demand is surging. The API reported a whopping 3.930million barrel drop in that storage point. The API reported a smaller than expected 609,000-barrel increase in distillates as cold weather overtook near record production. Truckers are already feeling the pain of rising diesel prices and at the pump it is going to get worse for them before it gets better. Gas supply did rise by 1,782 million barrels but that will provide little comfort at the gas pump where prices are the highest we have seen in a year at this time of year.

Demand is surging. With the U.S. factory production rising for a fourth straight month in December, according to Bloomberg, capping the strongest quarter since 2010 and underscoring a resurgence in manufacturing that's primed for further advances, Federal Reserve data, released Wednesday, is adding to the oil demand picture. Demand that is far outstripping our ability to ramp up crude production and fill the void of that spent supply.