Large drawdown of distillate inventories pushes up oil prices

The American Petroleum Institute (API) estimated that there was a rise this week in crude oil of 2.811 million barrels, broadly in line with analysts’ forecasts of a 2.796 million barrels to construct.

U.S. crude inventories have lost some 76 million barrels since the start of 2021 and about 22 million barrels since the start of 2020.

The previous week, the API reported a sharp drop in crude oil inventories of 6.1 million barrels after analysts predicted an increase of 2.796 million barrels.

Oil prices rose sharply on Tuesday ahead of the data release after the White House announced it would ban all imports of Russian oil and gas into the United States.

WTI was trading up 3.83% at $124 a barrel that day as of 3:30 p.m. EST, up $20 a barrel on the week. Brent crude was trading up 4.15% on the day at $128 a barrel on the day, up around $23 a barrel on the week.

US crude oil production has been flat for four consecutive weeks. For the week ending Feb. 25 — the last week for which the Energy Information Administration provided data — U.S. crude oil production remained at 11.6 million bpd. This is a drop of 1.5 million bpd from the pre-pandemic era.

This week, the API reported a decline in gasoline inventories to 1.988 million barrels for the week ending March 4, in addition to the previous week’s drawdown of 2.5 million barrels.

Distillate inventories saw a decrease in inventory of 5.485 million barrels for the week, after last week’s 400,000 barrel increase. Cushing saw a drop of 367,000 barrels this week. Cushing’s inventories stood at 22.8 million barrels as of February 25 and are down from 60 million barrels at the start of 2021 and from 37 million barrels at the end of 2021.

At 4:43 p.m. EST, WTI was trading at $124.40 (+4.20%), with Brent trading at $128.70 (+4.46%).

By Julianne Geiger for Oilprice.com

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