Oil Prices $2 Higher on OPEC Production Hike Delay, EIA Inventory Draw

Crude Oil surged higher in the first week of October but has been declining since then. However we’re seeing some bullish momentum today after rumours that OPEC might postpone crude production, while the EIA crude inventories showed a drawdown.

Lower tensions in the Middle East have recently eased the risk premium in oil prices, while the upcoming U.S. presidential election could significantly impact global energy markets. Adding to the upward pressure, recent EIA data supported a rise in oil prices today, showing an unexpected draw in U.S. crude oil inventories of 0.573 million barrels for the week ending October 25, 2024.

This figure stands in contrast to the previous week’s build of 1.643 million barrels, signaling a potential tightening in supply. Additionally, OPEC+ is set to gradually increase oil production in December; however, a Reuters report suggests that the production hike may be delayed by at least one month.

WTI Crude Oil Chart H4 – Facing the 50 SMA

This delay could support higher prices through the near term, as three sources within OPEC+ indicated uncertainty around the timing. Ahead of the EIA release, Brent crude was trading at $71.90 and immediately rose by 50 cents, showing the influence of inventory data and potential production adjustments on market sentiment.

• EIA Weekly Crude Oil Inventory Report:

  • Crude oil inventories decreased by 0.515 million barrels, against an expected build of 2.3 million barrels, showing a tighter supply than anticipated.
  • Gasoline inventories dropped sharply by 2.707 million barrels, compared to a 0.6 million barrel expected decline, suggesting stronger-than-anticipated demand or reduced production.
  • Distillate inventories saw a decline of 0.977 million barrels, though this was less than the expected 1.595 million barrel draw.
  • Cushing, Oklahoma storage levels rose by 0.681 million barrels, in contrast to last week’s 0.346 million barrel decrease, indicating a shift in regional supply levels.
  • Crude production remained steady at 13.5 million barrels per day, indicating stable output.

• API Private Inventory Report:

  • Crude oil inventories down by 573,000 barrels, close to the EIA’s reported draw.
  • Gasoline inventories also fell by 282,000 barrels, although less sharply than the EIA data.
  • Distillates inventories declined by 1.463 million barrels, aligning with lower product supply levels across refined outputs.
  • Cushing increased by 320,000 barrels, reflecting ongoing inventory build-up in this key storage hub.
  • Strategic Petroleum Reserve (SPR) saw a 1.2 million barrel build, indicating additional government stockpiling.

US WTI Crude Oil Live Chart