Oil Prices Boosted By Falling Crude Inventories

Crude oil prices rose today after the Energy Information Administration reported an inventory draw of 4.1 million barrels for the week to July 23.

This compared with a build of 2.1 million barrels reported for the previous week and a draw of 4.728 million barrels reported by the American Petroleum Institute for the week to July 23.

Analysts had expected the EIA to report a crude oil inventory draw of 3.43 million barrels for the week to July 23.

In gasoline, the EIA estimated an inventory draw of 2.3 million barrels for last week, with production averaging 9.8 million bpd. This compared with a modest stock decline of 100,000 barrels reported for the previous week and average production of 9.1 million bpd.

Gasoline demand has recovered strongly this summer, but according to a fresh Reuters report, it is already plateauing amid the resurgence in Covid-19 cases.

"We're still very much actively dealing with new cases here in the U.S. and also abroad, and that is putting greater pull on demand and what was originally anticipated for this recovery process in the middle of the summer for this year," said the American Automobile Association's manager of federal affairs Devin Gladden, as quoted by Reuters.

In middle distillates, the EIA reported an inventory decline of 3.1 million barrels for the week to July 23, with production at 4.7 million bpd. This compared with a draw of 1.3 million barrels for the previous week and a production rate of 4.9 million bpd.

Some airlines have been struggling with jet fuel shortages recently in some smaller U.S. airports, the Wall Street Journal reported earlier this week. The shortage is the result of something of a perfect storm of a strong rebound in air travel and devastating wildfires, which have combined to push up demand for the distillate fuel.

At the time of writing, Brent crude was trading at $74.73 per barrel, with West Texas Intermediate at $71.95 per barrel, both slightly up from opening.