Crude oil prices moved higher today after the U.S. Energy Information Administration reported an inventory decline of 12.2 million barrels for the week to June 28.
The inventory change compared with an inventory build of 3.6 million barrels estimated for the previous week, when the EIA also saw fuel inventories rising, which weighed on oil prices.
For the last week of June, the EIA estimated draws in fuel inventories.
Gasoline inventories shed 2.2 million barrels in the week to June 28, which compared with a build of 2.7 million barrels for the previous week.
Gasoline production averaged 10.1 million barrels daily last week, compared with 9.9 million barrels daily for the previous week.
In middle distillates, the EIA estimated an inventory decline of 1.5 million barrels for the last week of June, which compared with a modest draw of 400,000 barrels for the previous week.
Middle distillate production averaged 5.1 million barrels daily in the last week of June, which compared with 4.9 million barrels daily for the previous week.
Oil prices, meanwhile, remained at two-month highs after the American Petroleum Institute estimated a weekly inventory draw, pegging it at a significant 9 million barrels.
Prices have also received support from geopolitical factors this week, as traders worry about a further escalation of violence in the Middle East as Israel continues to bomb Gaza. On the other hand, fears of production disruption in the Gulf of Mexico because of Hurricane Beryl subsided after the hurricane weakened to a tropical storm.
“The key risk for oil markets is that an Israel?Hezbollah war widens into a broader conflict,” said Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. “In particular, the more direct involvement of Iran in an Israel?Hezbollah war may put at risk Iran’s oil supply and related infrastructure.”
In addition to geopolitical factors, signs are emerging of a slowdown in U.S. oil production growth and the latest oil export data has revealed Saudi Arabia accounted for half of a global oil export decline that amounted to 1 million barrels daily last month.