The Energy Information Administration reported an estimated inventory draw of 1.5 million barrels for the week to March 8. Gasoline stocks also declined while middle distillates inched up.
The figures compared with a crude oil inventory build of 1.4 million barrels for the previous week, with substantial declines in both gasoline and middle distillates for that week.
A day before the EIA released its report, the American Petroleum Institute reported inventory draws across both crude and fuels, pushing oil prices higher on Tuesday. Benchmarks continued higher on Wednesday.
In gasoline, the EIA estimated an inventory draw of 5.7 million barrels for the week to March 8, which compared with a decline of some 4 million barrels for the previous week.
Gasoline production last week averaged 9.9 million barrels daily, which compared with 9.6 million barrels daily for the previous week.
In middle distillates, the EIA reported an inventory increase of 900,000 barrels for the week to March 8, with production averaging 4.6 million bpd.
These changes compared with an inventory draw of 4.1 million barrels and production averaging 4.3 million barrels daily for the previous week.
A day before it released its weekly oil inventory report, the EIA revised its U.S. oil production outlook in its Short-Term Energy Outlook, now expecting stronger growth than earlier. The EIA now expects production to add 260,000 bpd this year, for a total of 13.19 million barrels daily. That's up from a modest 170,000 bpd growth projection earlier.
This should have been bearish for prices, but the EIA also said in its STEO that it saw OPEC production remain constrained while demand strengthened, which would lead to a tighter market beginning as soon as the second quarter of the year.
Following this report-and the API's inventory estimate-oil futures were around 2% higher on the day, boosted additionally by expectations of rate cuts by the Fed come summer. These expectations are not based on signals from Fed officials who remain cautious about any rate-cutting commitments especially as inflation ticked higher in February.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Regards Gerry Runolfson