Oil Prices Jump On Record Production Plunge, Major Gasoline Draw

Oil prices rose today after the Energy Information Administration reported an inventory decline of 1.5 million barrels for the week to September 3, with sizeable draws in fuel inventories as well.

At 423.9 million barrels, the EIA said, crude oil inventories are below the five-year average for this time of the year.

Last week’s draw compared with an inventory decline of 7.2 million barrels estimated for the previous week. Analysts had expected the authority to report an oil stock

In gasoline, the EIA reported an inventory draw of 7.2 million barrels for the period, which compared with a draw of 1.3 million bpd for the previous week.

Gasoline production last week averaged 10.1 million bpd, which compared with 9.9 million bpd.

In middle distillates, the authority estimated an inventory draw of 3.1 million barrels for the week to September 3. This compared with a decline of 1.7 million barrels for the previous week.

Middle distillate production last week averaged 4.2 million bpd. This compared with 4.8 million bpd a week earlier.

Total refinery throughput averaged 14.3 million bpd last week.

Brent crude was trading at $72.47 a barrel at the time of writing, with West Texas Intermediate at $69.20 a barrel, both slightly lower since opening, after a slide yesterday on demand concern.

The concern was prompted by Saudi Arabia’s move to cut oil prices for Asian buyers signaling it was adjusting to weaker demand. The cuts were by more than $1 per barrel of Saudi crude.

Oil demand trends in the United States were also in the spotlight amid the rising Covid-19 case count although continued disruptions in the Gulf Coast refining industry following Hurricane Ida put a cap on that particular downside risk.

A lot of Gulf of Mexico oil production remains shut in after the hurricane, according to BSEE data, Hurricane Ida may not have been the deadliest or most damaging storm in the U.S., but its impact on Gulf of Mexico oil production has been the largest ever recorded.

By Irina Slav for Oilprice.com

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