By Barani Krishnan
Investing.com - Oil prices edged higher on Wednesday after the U.S. government reported an outsized inventory draw in crude for last week.
But a larger-than-expected build in diesel stockpiles still raised questions about fuel demand from the trucking sector, in what would typically be a busy time for holiday season deliveries.
New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled Wednesday’s trade up 40 cents, or 0.8%, at $48.40 per barrel. WTI hit a session high of $48.66 earlier.
London-traded Brent, the global benchmark for crude, finished the day’s official session at $51.63, up 54 cents, or 1%. Brent’s peak for the day was $51.91.
After rallying for seven straight weeks on optimism over Covid-19 vaccine breakthroughs and roll-out, oil is ending the final two weeks of the year in a range and mostly lower on concerns about fuel demand in 2021 amid signs that the pandemic might last longer than thought.
The market caught a break on Wednesday though, after the Energy Information Administration reported that U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, fell by 6.065 million barrels last week to 493.5 million barrels. Analysts had expected a 2.583-million barrel drawdown.
The EIA data showed that the outsized crude draw was due to a 240,000-barrels-per-day drop in imports, mainly from Saudi Arabia, and surge of more than 500,000 bpd in U.S. crude exports.
Aiding the crude inventory slide were refinery runs, which rose by 273,000 bpd last week, EIA data showed. The weekly refinery utilization rate itself rose 1.4%, according to the report.
U.S. gasoline inventories were another positive factor, falling by 1.192 million barrels, compared with expectations for a 1.662-million barrel build.
But offsetting the bullish sentiment in the EIA report were distillate stockpiles. This component, includes diesel used by trucks and heating oil, rose by 3.095 million barrels, against expectations for a 0.529 million barrel drop.
The rise in distillate stockpiles at this time of year particularly raises eyebrows, given that it should be a roaring time for holiday season deliveries, with trucks plying roads coast-to-coast.
Notwithstanding the relevance of the weekly inventory numbers, analysts have warned against reading too much into such data toward the year-end, when the figures are usually distorted by accounting and tax issues.