Oil Jumps on Fuel Inventory Draws

Crude oil prices moved higher today after the U.S. Energy Information Administration reported an inventory build of 2.1 million barrels for the week to November 8. In fuels, however, inventories fell.

At the time of writing, Brent crude was trading at $72.75 per barrel, with WTI at $68.89 per barrel, both up from opening.

The crude oil inventory change compared with a build of the same size for the previous week, which pressured oil prices at the time.

A day earlier, the American Petroleum Institute had reported an unexpected but modest draw in crude oil inventories, at 777,000 barrels, for the week to November 8. The API also estimated a draw in gasoline inventories and a build in middle distillates.

Gasoline inventories, however, shed 4.4 million barrels in the week to November 8, with production averaging 10.3 million barrels daily.

This compared with an inventory increase of a modest 400,000 barrels for the previous week, when production stood at an average 9.7 million barrels daily.

In middle distillates, the authority estimated an inventory fall of 1.4 million barrels for the week to November 8, with production averaging 5 million barrels daily.

This compared with a build of 2.9 million barrels for the previous week, and output at 5.1 million bpd.

Prices, meanwhile, rose on Wednesday but today reversed their gains under the weight of lower demand expectations coupled with ample supply indications. Both OPEC and IEA signaled they expected a well supplied market this year and next.

“Oil is tackling the (earlier) weaker demand forecast narrative by OPEC, who deferred rolling back additional production for yet another month, fearing the adverse effect on prices,” Priyanka Sachdeva from Phillip Nova told Reuters.

OPEC revised down its oil demand forecast for this year, to 1.82 million barrels daily from 1.93 million barrels daily in the previous edition of the Monthly Oil Market Report. Total world oil demand is anticipated to reach 104.0 million bpd in 2024, bolstered by strong transportation fuel demand and ongoing healthy economic growth, particularly in a number of non-OECD countries, OPEC said on Tuesday.

The IEA meanwhile revised its demand outlook higher for this year but warned of an expected supply surplus in 2025.