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Oil Gains After EIA Reports Strong Draw To Crude Inventories

Gasoline pump

A day after the API reported an unexpected draw in U.S. oil inventories and a few hours after Saudi Arabia’s Oil Minister said that non-OPEC producers were discussing a production cut, the Energy Information Administration gave another energy drink to traders by reporting an inventory draw of 5.2 million barrels for the week to October 14.

On Tuesday, the API said that inventories had dropped by 3.8 million barrels, in stark contrast to analyst expectations for a build of 2.1 million barrels. The news immediately boosted oil prices on international markets.

The EIA, whose official figures are often very different from the industry body’s estimates, this time confirmed them. Commercial crude oil inventories in the U.S. stood at 468.7 million barrels in the seven-day period, adding that the figure was near the seasonal limit, although it did not provide a reference figure. This, however, is a definite improvement on the last few months, when inventories exceeded average levels for the season.

Gasoline stockpiles, according to the authority, rose by 2.5 million barrels, after a 1.9-million draw in the previous week’s report. Daily gasoline output stood at 9.5 million barrels, down from the previous week’s 9.9 million barrels.

Refineries in the U.S. processed an average daily of 15.4 million barrels of crude, down almost 200,000 bpd from the average 15.6 million barrels a week before.

The EIA’s figures should add to a growing bullish sentiment on international oil markets amid news such as Saudi Arabia’s August oil production decline and the Iraqi army’s advance on Mosul – the biggest and last stronghold of the Islamic State in the Middle East. These reports are for the moment trumping not-so-bullish reports about Libya raising its total daily output to 580,000 barrels of crude and Nigeria negotiating a multi-billion-dollar oil export deal with India.

Brent crude, riding the bullish wave, traded at US$52.71 a barrel at the time of writing, and West Texas Intermediate was changing hands at US$51.46 a barrel.

By Irina Slav for Oilprice.com

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