Oil Prices Climb Higher On Huge Crude Inventory Draw

Crude oil prices jumped higher today after the Energy Information Administration reported a crude oil inventory decline for the last week of 2019.

The draw totaled an impressive 11.5 million barrels. Analysts had expected a decline of 3.167 million barrels, after the EIA reported a draw of 5.5 million barrels for the week to December 20. At 429.9 million barrels, U.S. crude oil inventories are at the five-year seasonal average.

In gasoline the EIA reported an inventory increase of 3.2 million barrels for the week to December 27, up from a 2-million-barrel build for the previous week. Gasoline production averaged 10.2 million barrels daily during the period, compared with 10.3 million bpd a week earlier.

In distillate fuels the authority estimated an inventory increase of 8.8 million barrels, which compared with a decline of 200,000 barrels a week earlier. Distillate fuel production averaged 5.3, compared with 5.4 million bpd a week earlier.

Refineries processed 17.3 million bpd in the last week of 2019, compared with 17 million bpd a week earlier. Imports of crude oil averaged 6.4 million bpd.

Oil prices were already trending higher when the EIA released its weekly petroleum status report, pushed up by news about a U.S. air strike in Baghdad that killed a high-ranking Iranian military commander. This is the latest move in a fast escalation in the Middle East that has already sparked worry about the security of supply from the world's number-one exporting region.

Meanwhile, the EIA said earlier this week that U.S. oil production had hit a record 12.66 million barrels daily in October, with weekly estimates suggesting this could have risen further in the months since October to over 13 million bpd.

At the time of writing, Brent crude was trading at $68.69 a barrel, with West Texas Intermediate at 63.27 a barrel, both up by more than 3 percent since yesterday's close.

By Irina Slav for Oilprice.com

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