Draw In Crude Inventories Lifts Oil Prices

The OPEC logo is seen outside their headquarters in Vienna Austria

Analysts had forecast a draw of 400,000 barrels.

EIA today reported a 2.8-million-barrel draw in USA crude oil inventories for the week to October 6, lifting market spirits further amid higher oil demand growth projections from OPEC and growing Middle East tensions around Kurdistan.

The API reported a decline in USA gasoline inventories of about 1.58 million barrels.

However, the EIA also reported a 2.5-million-barrel rise in gasoline inventories for last week, exceeding analyst expectations of a 1.4-million-barrel increase, and in contrast to API estimates of a 1.575-million-barrel draw.

Increases in gasoline inventories at this time of the year are to be expected, as the general mood after the end of summer driving season is traditionally pessimistic when it comes to fuel demand. Distillate stocks fell by 1.5 million barrels, short of expectations for a drop of 2.2 million barrels. Both benchmarks have risen more than 20 percent from their lows in June as world oil markets tightened.

Oil has strengthened in recent weeks due to a sharp drawdown in distillates feeding expectations for renewed demand, but it is unclear whether USA crude prices will regain the high of almost $53 a barrel reached in late September. If the EIA stocks data points in a different direction, market sentiment could reverse later in the day.

The market was still under pressure, though, from a bearish outlook by the International Energy Agency, which lowered its forecast for oil demand for 2018.

A monthly oil report by the International Energy Agency (IEA) predicted global demand will grow by 1.6m barrels per day (bpd) in 2017 and 1.4m bpd in 2018. However, the buzz around the possibility of United States actively reining in supply is misplaced. Unlike the national or state-owned oil companies subject to government directives in the OPEC and non-OPEC countries cutting output, the USA independents can not be directed to rein in production and can not be expected to voluntarily do so.

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