Oil Prices Benefit From Bullish EIA Data

Crude oil prices moved up on Wednesday after the US Energy Information Administration reported an inventory draw of 3.1 million barrels for the week ending on Friday, October 28.

At 436.8 million barrels, inventories were 3% below the five-year average for this time of the year according to the EIA. A week earlier, it had estimated an inventory build of 2.6 million barrels.

In fuels, the EIA estimated a mixed picture. Gasoline stocks down by 1.3 million barrels in the last week of October, with production at 9.5 million bpd compared with an inventory draw of 1.5 million barrels for the previous week and a production rate of 9.4 million barrels daily.

In middle distillates, the EIA estimated a modest inventory increase of 400,000 barrels for last week, with production averaging 5.1 million barrels daily compared with another minor build of 200,000 barrels for the previous week, with production averaging 5 million barrels daily.

The distillate supply situation remains quite serious, with more and more analysts warning about a shortage of diesel. One fuel supplier warned diesel is about to go into short supply, pushing consumer prices higher.

There is not enough refining capacity after the shutdowns over the past two years to produce enough diesel to satisfy demand. Meanwhile, oil has been on the rise this week because of the weaker US dollar and hopes that China may soon amend its zero-Covid policy, according to unverified reports on social media.

At the time of writing, Brent crude is trading at $95.40 per barrel versus the previous closing price at $94.52, while WTI crude is trading at $89.32 versus the previous closing price at 88.56.