The American Petroleum Institute (API) reported a huge draw of 5.087 million barrels in United States crude oil inventories, largely in line with an S&P Platts' survey of analysts that expected inventories would draw down by 1.4 million barrels for the week ending October 27-continuing the extended drawdown in recent weeks.
Gasoline inventories, according to the API, saw a major draw of 7.697 million barrels for the week ending October 27, against an expectation of a much more modest draw of 1.7 million barrels. Other analysts, according to Market Watch, estimated a draw of 2.5 million barrels.
Both WTI and Brent benchmarks were up on the week and are now up at nearly two-year highs on renewed faith in OPEC's ability to rebalance the oil market, aided by the notion that OPEC is likely to extend the current production cut deal until the end of 2018. Further support came from supply disruptions in Iraq post-Kurdish referendum.
The fears of some that the goal of rebalancing is but a pipedream are offset by a few analysts who are seeing a possible swing in the opposite direction, with one Reuters analyst cautioning that "The fear of oversupply could easily turn to a fear of undersupply if inventories keep declining like they have been and demand continues to grow."
Crude oil inventories have drawn down a total of 35.1 million barrels since the start of 2017, according to API data.
The WTI benchmark was up .09 percent on the day to $54.20 at 12:59pm EST-almost $2.00 per barrel over last week's levels. Brent was trading up 0.28 percent on the day at $60.76. Both benchmarks continued to creep up as the data release drew near.
Gasoline was trading up 0.84 percent at $1.728-almost 10 cents above last week.
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Distillate inventories also saw a sharp decline this week, down 3.106 million barrels. Analysts had expected a drop of 2.5 million barrels.
Inventories at the Cushing, Oklahoma, site decreased by a small 263,000 barrels this week.
The U.S. Energy Information Administration report on oil inventories is due to be released on Wednesday at 10:30 a.m. EDT.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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