Oil bounces off surprise draw in crude stocks
A week after reporting a large increase in oil inventories that pushed prices down for some time, the EIA today noted crude oil had lost 400,000 barrels last week.
At 426.5 million barrels, inventories remain below the five-year average for this time of year.
Gasoline inventories fell last week, by 5.4 million barrels. This compares to a draft of 2 million barrels for the previous week.
Gasoline production last week averaged 10.1 million bpd, up from 9.6 million bpd the week before.
In middle distillates, the EIA estimated a drop in stocks of 3.9 million barrels. This compares to a stable week-to-week inventory situation for the seven days leading up to October 8.
Middle distillate production averaged 4.4 million barrels per day last week. This compared to 4.7 million barrels per day for the previous week.
Meanwhile, the now global energy crisis continued to support prices. Since early September, Brent crude has gained nearly 20%, according to Reuters, while West Texas Intermediate added 21 percent.
“The supply-demand balances show that the market is in a supply shortfall, leading to deep inventory drawdowns and pushing up prices,” Louise Dickson, senior oil markets analyst at Rystad Energy, told Reuters.
“This market tension is expected to continue through most of 2022, and crude oil supply will only catch up with crude demand by the fourth quarter of next year.”
This has prompted a revised forecast for peak oil demand, with the International Energy Agency warning earlier this month that more investment in new oil production is needed to avert more energy crises.
This week, a drop in temperatures in China fueled the rise in oil prices, as the first sign of an upcoming test of the country’s winter readiness. China has gobbled up coal, oil and gas in anticipation of the cold season, pushing all fossil fuel prices up.
As of this writing, Brent crude is trading at $ 84.09 per barrel, WTI at $ 82.02 per barrel.
By Irina for Oil Octobers
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