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Oil Moves Higher on Fuel Inventory Draws

Crude oil prices rose today after the Energy Information Administration reported an inventory build of 3.2 million barrels for the last week of March. The authority also estimated draws in both gasoline and middle distillates.

This compared with an oil inventory build of 3.2 million a week earlier, which pushed prices lower at the time. It also compared with an inventory draw of 2.3 million barrels as estimated by the American Petroleum Institute earlier this week.

Gasoline inventories, however, shed 4.3 million barrels in the week to March 29, with production averaging 10 million bpd. These figures compared with an inventory build of 1.3 million barrels for the previous week, when production stood at an average of 9.2 million barrels daily.

In middle distillates, the EIA reported an inventory decline of 1.3 million barrels for the last week of March, with production averaging 4.6 million bpd.

This compared with a stock draw of 1.2 million barrels for the previous week and production averaging 4.8 million barrels daily.

Prices, meanwhile, have been on the rise thanks mainly to geopolitical factors but also on the back of the fact that OPEC+ confirmed its current production policy of caps, which has already tightened oil supply and helped prices move higher.

Earlier in the week, Brent crude hit the highest since last October as Ukrainian drone attacks on Russian refineries continued fueling concern about global fuel supply security and Iran vowed to take revenge on Israel for the strike on its consulate that killed five.

"The likelihood that continued restricted Russian product exports could further tighten US petroleum supplies has suddenly forced re-calculation of U.S. (oil) balances across the rest of this month and possibly beyond," Jim Ritterbusch from energy consultancy Ritterbusch and Associates, told Reuters.

Analysts are wary of Iran's response to the Israel attack, too, with one suggesting to Reuters that it might not be "as measured" as on previous occasions.

"Despite a flurry of diplomatic activity meant to turn down the heat on the situation, there is definitely a chance the Iranian response will not be as measured this time," Bob Yawger from Mizuho told the publication.

By Irina Slav for Oilprice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More