Oil prices have crept up higher following the release of data by the US Energy Information Administration (EIA) that showed hefty draws in diesel and petrol, offsetting the first crude inventory build in six weeks, according to Reuters and Bloomberg.
Initially, crude prices fell when the said crude stocks shot up to 4.9 million barrels in the week that ended on October 7 this year. This had been way above the expected 700,000-barrel rise forecasted by analysts.
However, prices went back in the black when the market turned its attention to product inventory drawdowns within the same data provided by the EIA that reported a drop of 3.7 million barrels for distillates, which included diesel and heating oil, and a 1.9 million decline in barrels for petrol. This has been the predicted trend since the July report (see graph below).
Previously, experts had been predicting that distillates would draw by just 1.6 million barrels and petrol would decline by 1.5 million.
“There is a lot of seasonality in this data,” Scott Shelton, energy futures broker at ICAP in Durham, North Carolina said, adding that crude builds were common this time of year as US refineries headed into maintenance.
Shelton was cautious about the rise in price of crude imports by 110,000 barrels per day (bpd) because it was “marginal” and “hard to get too excited about if you were bearish”.
As of now, supplies of oil are still some ways off from being controlled but any signs of stability to pricing is still worth monitoring.
To sum up the report, brent crude cozied up at US$0.22 (A$0.29), or 0.4 per cent and at US$52.03 (A$68.75) per barrel. US West Texas Intermediate (WTI) crude rose US$0.26 (A$0.34), or 0.5 per cent, to settle at US$50.44 (A$66.65).
Since OPEC announced its first planned output cut in eight years, oil prices have trended higher since September 27, with brent gaining about 13 per cent. The last time happened when it had to step in with crude flying above the US$100 mark per barrel.
“The mix of higher crude and lower product supplies cancelled out each other, so the move was small,” Michael Lynch, president of the strategic energy & economic research in Winchester, Massachusetts told Bloomberg. “We’re all waiting to see what OPEC does next month.”