A day after the American Petroleum Institute estimated a crude oil inventory draw of 5.421 million barrels, the Energy Information Administration strengthened the mood by reporting an inventory draw of 3.8 million barrels for the week to October 9.
At 489.1 million barrels, the authority said, crude oil inventories were still above the five-year seasonal average but by a smaller margin than the previous week's 12 percent.
For the previous week, the EIA had estimated a modest inventory draw of half a million barrels. Analysts had expected a substantial draw, at 3.387 million barrels.
In gasoline, the EIA reported an inventory draw of 1.6 million barrels for the week to October 9. This compared with a decline of 1.4 million barrels a week earlier. Gasoline production averaged 9.2 million bpd last week, compared with 9.5 million bpd a week earlier.
In distillate fuels, the EIA estimated a stock decline of 7.2 million barrels, compared with a 1-million-barrel draw a week earlier. Production of distillate fuels averaged 4.3 million bpd last week, compared with 4.5 million bpd a week earlier. Distillate fuel inventories remain at seriously inflated levels because of the uneven recovery in the demand for different fuels.
API's report yesterday lent oil prices some upward pressure, and now the EIA's inventory estimate could accelerate it, especially with the strong drop in distillate stocks. Yet in addition to the positive news from the API, oil prices also got a boost from reports that ConocoPhilips was in talks with Concho Resources over a possible takeover. This could be a signal of a livening up in the M&A space in U.S. oil and gas, which would, in turn, be likely to be taken as a sign of an improving industry environment.
At the time of writing, oil was trending lower, with Brent crude at $42.13 a barrel and West Texas Intermediate at $39.78 a barrel. Downward pressure remains strong as Libya continues to ramp up its oil output, and Russia said OPEC+ was sticking to its plan to further relax production cuts despite the feared second wave of Covid-19 infections that will hurt demand again.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More