A day after the American Petroleum Institute pushed oil prices higher by estimating an inventory draw of as much as 7.55 million barrels for last week, the Energy Information Administration reported a draw of 12.8 million barrels in crude oil inventories, pushing prices further up significantly. This is the most substantial inventory decline in at least a year.
Yesterday, following API's report, Brent crude touched its highest price level in almost four weeks as the oil market once again dances to the Middle Eastern tensions tune, with animosity between Washington and Tehran rising further after President Trump announced sanctions against senior Iranian government officials including the country's Supreme Leader Ali Khamenei.
API's report on stockpiles also had a role to play in the rise but this role has proved to be a minor one each week as sentiment reverses in hours once the EIA comes out with the official inventory figures. This week, however, it provided a significant boost to prices as analysts had expected a much smaller draw, of some 2.5 million barrels.
The authority today also reported a gasoline inventory draw of 1 million barrels for the week to June 21, compared with a draw of 1.7 million barrels for the week before. Production stood at 10.5 million bpd, while a week earlier it averaged 10.4 million bpd.
In distillate fuels the authority reported an inventory decline of 2.4 million barrels for last week, which compared with a minor draw to the tune of 600,000 barrels a week earlier. Production of distillate fuels averaged 5.3 million bpd last week, which compared with 5.4 million bpd a week earlier.
At the time of writing, Brent crude was trading at US$65.22 a barrel, with West Texas Intermediate at US$59.17 a barrel, both higher than yesterday's close thanks to the API estimate and the deteriorating U.S.-Iranian situation. The next big event-bar unforeseen ones-will be OPEC's meeting on production next week. It would divert a bit of attention from Middle Eastern politics but will undoubtedly heighten price volatility considerably as well.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More