Oil Rebounds On Large Crude Draw

Crude oil prices recovered somewhat on Wednesday morning after the Energy Information Administration reported an inventory draw of 4.6 million barrels for the week to December 10.

At 428.3 million barrels, crude oil inventories remain 7% below the five-year average.

Last week's draw compares with a modest 200,000-barrel decline in crude oil inventories for the previous week.

On Tuesday, the American Petroleum Institute estimated a crude oil inventory draw of 815,000 barrels for the week to December 10.

In fuels, the agency reported draws.

Gasoline inventories shed 0.7 million barrels in the reporting period, which compared with a build of 3.9 million barrels for the previous week.

Gasoline production averaged 10.0 million bpd, compared with 9.6 million bpd in the previous week.

In middle distillates, the EIA estimated an inventory decline of 2.9 million barrels for the week to December 10, which compared with an increase of 2.7 million barrels for the previous week.

Middle distillate production averaged 4.8 million barrels daily last week, which compared with 4.9 million bpd in the prior week.

Oil prices have been pressured by pandemic concerns this week, after the International Energy Agency said in its latest monthly oil report that the omicron variant was about to have a negative effect on oil demand. That's despite reports that the variant causes much milder symptoms in those infected than previous variants.

The prospect of the Federal Reserve speeding up the start of fiscal stimulus tapering and raising interest rates earlier than previously expected has added to downward pressures on oil.

"As some accelerated tapering out of the Fed becomes more likely, US interest rates are apt to lift in pushing additional strength into the dollar in forcing price weakness into the oil," Jim Ritterbusch from Ritterbusch and Associates told Reuters on Tuesday.

At the time of writing, Brent crude was trading at $72.71 per barrel, with West Texas Intermediate at $69.64 per barrel, both down from opening.

By Irina Slav for Oilprice.com

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