Oil Prices Down On Inventory Drawdown

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Oil Prices Down On Inventory Drawdown

Oil Prices Down By 0.7% On Inventory Drawdown

Oil prices appear to be trading a little lower due to the weakness seen in the gasoline demand. However, all of that was overshadowed by the fact that the US crude inventories have gone through a major drawdown.

For now, the WTI is trading with a -0.7% change and is seen near $82.81. Similarly, the Brent oil futures are trading at $88.02 with a -0.5% change for the day.

6.4 Million Barrels Drawdown In Usa

The dominant theme that's driving the WTI and Brent oil markets is the steep decline seen in the US crude inventories. At the same time, a decline in gasoline demand is putting bearish pressure on the oil markets.

According to the data from EIA, 6.4 million barrels were drawn from the US oil inventories during the week. When we compare this with the forecasts for a buildup of around 1.6 million barrels, the difference becomes massive.

But what's driving the drawdown in the crude oil inventories? It is due to the activity pick-up seen in the refinery sector which went from 88.1% to around 88.5% in just a week.

And if we look at the overall product inventories, the data was mixed as distillate showed a decline while gasoline also dipped despite the weakness seen in demand.

According to ANZ Research, weak demand is due to the weather which is a lot warmer than what's normal. When this is combined with supply shortages and weak economic growth, all of it starts to make sense.

While the market is looking at the inventory drawdown, the real driver for the oil prices is the decisions made by the OPEC and OPEC+. Additionally, global economic growth along with inflation and interest rates are also the key drivers for the oil markets in both the short and long term.

Once the central banks around the world move ahead with interest rate cuts, a jump in both the WTI and the Brent will be witnessed.

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