Oil Jumps Higher On Inventory Draws

Crude oil prices inched higher today after the U.S. Energy Information Administration reported an inventory decline of 4.5 million barrels for the week to October 13.

That compares with a substantial build for the week before, which pressured oil prices. For the second week of October, the EIA reported 10.2 million barrels in additions to crude inventories.

This Tuesday, however, the American Petroleum Institute estimated an inventory draw of 4.4 million barrels plus draws in fuels, too, which sent prices higher. Expectations had been for a modest build of about half a million barrels.

The EIA reported inventory draws in fuels, as well.

In gasoline, the authority estimated an inventory draw of 2.4 million barrels for the week to October 13. This compared with a draw of 1.3 million barrels for the previous week.

Gasoline production last week averaged 9.8 million barrels daily, which compared with 9.7 million barrels for the previous week.

In middle distillates, the EIA reported an inventory decline of 3.2 million barrels for the week to October 13, with production averaging 4.7 million bpd.

This compared with an inventory draw of 1.8 million barrels for the previous week, with production in that week running at an average 4.7 million barrels daily.

Both global and U.S. middle distillate stocks remain significantly lower than normal for this time of the year, Reuters’ market analyst John Kemp reported last week. In the U.S., distillate inventories were 21 million barrels below the ten-year seasonal average.

Oil prices, meanwhile, were on the rise earlier today following a missile strike on a hospital in Gaza that killed some 500 people. Israel and Hamas both blamed the other for the attack, which fueled fears of oil supply disruption in case the conflict escalated regionally.

Later in the day, Iran and Saudi Arabia both condemned the attack. Iran’s Foreign Minister called for an oil embargo on Israel and the Saudi Foreign Ministry in a statement called on the international community to “abandon the double standards and selectivity” in the application of international humanitarian law with regard to Israel.

Following these developments, at the time of writing, Brent crude was trading at $91.12 per barrel, with West Texas Intermediate at $87.70 per barrel, both up from opening.

By Irina Slav for Oilprice.com

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