Crude oil prices today moved slightly higher, after the Energy Information Administration reported an inventory draw of 3.4 million barrels for the week to July 26.
The inventory change compared with a draw of 3.7 million barrels for the previous week, when fuel inventories also declined substantially.
For the week to July 26, the EIA estimated mixed changes in fuel inventories.
Gasoline stocks shed 3.7 million barrels in the period, with production averaging 10 million barrels daily. This compared with a stock draw of 5.6 million barrels for the previous week, when production of gasoline averaged 10.2 million barrels daily.
In middle distillates the EIA reported an inventory build of 1.5 million barrels for the week to July 26, when production stood at an average 5 million barrels daily. This compared with a stock decline of 2.8 million barrels for the week before, when production averaged 4.9 million barrels daily.
Oil prices meanwhile got a boost from geopolitics, after Hamas leader Ismail Haniyeh was killed in Iran, prompting expectations of further escalation in the Middle East war. Reinforcing these expectations, Israel claimed it had killed a senior Hezbollah figure in an air strike on Beirut that was a retaliation for a strike Hezbollah carried out over the weekend.
"I think putting it all together certainly raised the chances of escalation in the Middle East," IG analyst Tony Sycamore told Reuters, adding that it was "Worth noting as well that after three straight weeks of declines, long positioning from speculative accounts in crude oil has been significantly reduced. Hence conditions are ripe for a rebound."
Adding to the bullish mood on oil markets, the American Petroleum Institute on Tuesday reported another inventory draw of close to 4.5 million barrels for the week to July 26.
The rally was capped, however, by now chronic doubts about the strength of China's oil demand in the coming months. The doubts have been fueled by economic reports that fell short of analyst and trader expectations.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More