Oil Prices Rise On Hefty Crude Inventory Draw

Another week, another draw - this seems to be the refrain this driving season, with the API and the EIA in sync with their weekly figures most of the time.

This week has been no exception, with the EIA reporting a hefty draw in U.S. commercial oil inventories a day after the API surprised analysts by estimating inventories had declined by 9.2 million barrels.

The authority calculated commercial inventories of crude oil had gone down by 8.9 million barrels in the week to August 11, after a draw of 6.5 million barrels a week earlier.

API's report lent some support to international prices on Tuesday amid a stronger U.S. dollar and concern about flagging demand in China. The EIA's figures will most probably strengthen the positive effect despite the persistent glut.

The EIA also said there was no change in gasoline inventories for the week to August 11, which might be a cause for worry, after last week it said inventories of the fuel had jumped up by 3.4 million barrels, which offset the positive news of the crude inventory draw. Related: Can The Permian Push Prices Down To $40?

Refinery runs averaged 17.6 million barrels last week, the authority said in its weekly report, versus 17.4 million bpd in the week before. Daily gasoline production fell to 10 million barrels, compared with 10.3 million bpd a week earlier.

Whatever effect the EIA's figures have on prices is bound to be short-lived as oil's fundamentals remain largely unchanged, with rising U.S. shale output offsetting OPEC's and its partners' cuts that should together take off 1.8 million bpd from global supply.

Oil demand prospects are not too rosy either, despite the IEA recently revising its 2017 demand growth outlook to 1.5 million bpd from 1.4 million bpd. Improving fuel efficiency and increased adoption of EVs in the U.S. will be largely responsible for the trend.

By Irina Slav for Oilprice.com

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