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Oil Prices Jump On Large Inventory Draw

Crude oil prices jumped higher today after the Energy Information Administration reported a crude oil inventory draw of 9.9 million barrels for the week to January 22. Fuel inventories were mixed.

The crude oil draw compared with a build of 4.4 million barrels for the previous week. It also compared with analyst expectations for a modest increase of some 600,000 barrels.

In gasoline, the authority reported an inventory increase of 2.5 million barrels for the week to January 22, with production averaging 8.7 million bpd. This compared with a modest inventory decline of 300,000 barrels and average production of 8.9 million bpd for the previous week.

Middle distillates shed 800,000 barrels last week, versus a build of half a million barrels the week before. Production averaged 4.5 million bpd for the second week in a row.

A day before the EIA released its weekly petroleum report, the American Petroleum Institute reported its own estimate for oil inventories, which was for a draw of 5.272 million barrels. As this amount exceeded analyst expectations by a wide margin, oil prices inched higher.

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Prices were also supported by reports about possible supply disruptions from Iraq and Libya. The former said it planned to reduce production in line with its commitments under the OPEC+ agreement, while the latter’s exports are being threatened by the Petroleum Facilities Guard, which claims it is owed salaries.

Meanwhile, the IMF said it expected oil prices to average $50 a barrel this year, which would be significantly higher than the average for 2020 but lower than the average for 2019. Still, the forecast was an upward revision on IMF’s previous prediction for oil prices signaling the market is improving, however slowly.

At the time of writing, Brent crude was trading at $55.62 a barrel, and West Texas Intermediate was changing hands at $52.27 a barrel. Both were down since the opening of trade today.

By Irina Slav for Oilprice.com

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