Crude oil prices moved up today after the Energy Information Administration reported an inventory draw of 3.1 million barrels for the week to October 28.
At 436.8 million barrels, inventories were some 3 percent below the five-year average for this time of the year, the EIA also said. A week earlier, it had estimated an inventory build of 2.6 million barrels.
In fuels, the EIA estimated a mixed picture.
Gasoline stocks down by 1.3 million barrels in the last week of October, with production at 9.5 million bpd.
This compared with an inventory draw of 1.5 million barrels for the previous week and a production rate of 9.4 million barrels daily.
In middle distillates, the EIA estimated a modest inventory increase of 400,000 barrels for last week, with production averaging 5.1 million barrels daily.
This compared with another minor build of 200,000 barrels for the previous week, with production averaging 5 million barrels daily.
The distillate supply situation remains quite serious, with more and more analysts warning about a shortage of diesel. One fuel supplier warned diesel is about to go into short supply, pushing consumer prices higher.
A CBS report tried to counter the warning by citing an economist as saying “if the entire world were to stop, we would have 25 days worth of diesel. But the world doesn't stop. We're not counting on it stopping.”
The same economist compared the situation with diesel to a grocery store’s supply of milk. “Your grocery store may have an inventory of three days of milk. That's because they only have three days' worth at any given point. But the cow keeps milking, the farmer keeps sending milk, the dairy keeps delivering.”
The problem with diesel, however, appears to be there not enough “diesel cows” available. In other words, there is not enough refining capacity after the shutdowns over the past two years to produce enough diesel to satisfy demand.
Meanwhile, oil has been on the rise this week thanks to a weaker greenback and hopes that China may soon amend its zero-Covid policy, according to unverified reports on social media.
At the time of writing, Brent crude was trading at $94.40 per barrel, with West Texas Intermediate at $88.17 per barrel, both down moderately from opening.
By Irina Slav for Oilprice.com
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