Oil Prices Shoot Up On Large Inventory Draw

A day after API’s estimate of another weekly crude oil inventory draw in a row sent WTI higher, the Energy Information Administration confirmed a large draw, at 9.6 million barrels for the week to March 15.

The authority said crude oil inventories stood at 439.5 million barrels at March 15, slightly below the average for the season.

In gasoline, the EIA reported a draw of 4.6 million barrels for the week to March 15, unchanged from a same-size draw a week earlier. Gasoline inventories have been posting hefty declines for three weeks in a row now.

In distillate fuel, the authority said inventories had shrunk by 4.1 million barrels, compared with a small build of 400,000 barrels in the prior week.

Refineries processed 16.2 million barrels of crude daily last week, the EIA also said, which compared with 16 million bpd a week earlier. Gasoline production averaged 9.9 million barrels daily, versus 9.7 million bpd a week earlier, and distillate fuel production averaged 4.9 million bpd, virtually unchanged on the previous week.

The EIA’s report will certainly help crude oil prices recover some of the losses they suffered yesterday after the brief spike following API’s report as worries around the U.S.-China trade deal deepened. What’s more, U/S. shale producers began hedging their future output to capture relatively higher prices, which also pressured West Texas Intermediate.

While OPEC’s production cuts is providing fuel for prices to climb higher, as is concern about supply from sanction-hit Iran and Venezuela, U.S. production has continued to act as a headwind for benchmarks, and so have expectations of slower demand growth resulting from weaker global economic growth this year.

At the time of writing, Brent crude was trading at US$67.37 a barrel and West Texas Intermediate was changing hands for US$59.10 a barrel, both down from opening this morning.

By Irina Slav for Oilprice.com