Oil closes higher as US oil inventories fall in a market suffering from tight supplies
Oil prices rose on Wednesday, with crude stocks at the largest US storage site at their lowest level in three years and fuel stocks across the United States falling sharply, in a sign of increased demand.
Brent crude futures rose 74 cents, or 0.9 percent, to settle at $85.82 a barrel, its highest level since October 2018.
US West Texas Intermediate crude futures for November, which expire on Wednesday, rose 91 cents, or 1.1 percent, to settle at $83.87 a barrel. December contracts rose 98 cents to settle at $83.42 a barrel.
Crude prices rose amid tight supplies, with the Organization of the Petroleum Exporting Countries (OPEC) continuing to slowly increase production instead of intervening to pump more crude into the market, and in light of rising US demand.
The US Energy Information Administration said that crude stocks in the United States fell by 341,000 barrels in the week ending October 15 to 426.5 million barrels, compared to expectations of analysts polled by Reuters for an increase of 1.9 million barrels.
The government agency added that crude stocks at the delivery center in Cushing, Oklahoma, fell 2.3 million barrels to 31.2 million barrels. This is the lowest level since October 2018, indicating a tight market that may take some time to reduce.
The decrease in inventories came despite the decline in crude consumption in refineries by 71 thousand barrels per day last week. Refineries operating rates (SE: 2030) decreased by two percent as they refine less oil in the traditional maintenance season.
The administration said that gasoline stocks fell 5.4 million barrels last week to 217.7 million barrels, a larger-than-expected drop and the lowest level since November 2019.
Energy Information Administration data showed that distillate stocks, which include diesel and heating oil, fell by 3.9 million barrels, the lowest level since April 2020.
Oil markets in general remain supported on the back of the global coal and gas crisis, which led to a shift to diesel and fuel oil for power generation.
Saudi Energy Minister Prince Abdulaziz bin Salman said users switching from gas to oil could represent a demand of between 500,000 and 600,000 barrels per day, depending on winter weather and related energy prices.