Crude oil prices moved higher today after the Energy Information Administration today reported a modest inventory draw of 200,000 barrels for the week to September 23.
This compared with an increase in oil inventories of 1.1 million barrels for the previous week. Yesterday, the American Petroleum Institute estimated a 4.15-million-barrel build in crude oil inventories for the week to September 23.
In fuels, the EIA reported draws across the board.
Gasoline stocks, according to the authority fell by 2.4 million barrels in the reporting period, with production averaging 9.6 million barrels daily.
This compared with an inventory build of 1.6 million barrels and average daily production of 9.5 million barrels.
In middle distillates, the EIA estimated an inventory fall of 2.9 million barrels for the week to September 23, with average daily production at 5 million barrels.
This compared with an inventory build of 1.2 million barrels and average daily production of 5.2 million barrels a week earlier.
In the past few days oil prices have been on the slide as aggressive Fed policy has sent the dollar soaring. Earlier today, however, prices reversed the trend prompted by the shutdown of some offshore production in the Gulf of Mexico ahead of Hurricane Ian.
Expectations that OPEC+ will agree oil production cuts at its next meeting next week also served to lend some support to oil prices in the past few days.
There may be more support for oil prices coming soon, too, as demand for the commodity remains robust while supply is not growing. In fact, it’s shrinking, and so is spare production capacity.
OPEC’s latest production figures showed the total was 3.58 million bpd below targets; Russia’s exports are seen dropping by 2.4 million bpd next year; and U.S. producers are staying on the cautious path with regard to production growth.
This, plus the need for the U.S. to replenish the strategic petroleum reserve after sales of 180 million barrels, suggests a bullish outlook for oil prices in the near to medium term.
On the bearish side, a recession could offset much of the bullish potential and analysts see the chances of a recession in the U.S. at between 45 percent for the next 12 months and 55 percent for the next 24 months.
By Irina Slav for Oilprice.com
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Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert