A bigger draw than expected

US commercial crude oil inventories fell by 1.9 million barrels to 410.6 million barrels in the week ending 23 October, the Energy Information Administration said. The drop ran against analysts' expectations in a Reuters poll for a small rise of 15,000 barrels, and left total stocks about 4% below the five-year average for this time of year.

It was the fourth consecutive weekly draw, taking commercial stocks to their lowest level since late July, according to market reports of the data.

Refined products split in opposite directions

The detail beneath the headline was mixed. Stocks at Cushing, Oklahoma, the delivery hub for US futures, fell by 624,000 barrels, while inventories on the Gulf Coast dropped to their lowest since December 2024.

Distillate stocks, which include diesel and heating oil, fell by 1.5 million barrels to 102.8 million barrels, about 10% below the five-year average. Gasoline moved the other way, rising by 3.9 million barrels to 209.2 million, against expectations of a draw, as US gasoline demand fell to its lowest since February during the reporting week.

Why the market noticed

Refinery crude runs fell by 123,000 barrels a day and utilisation eased 0.6 percentage points to 92.8%, while net crude imports dropped by 796,000 barrels a day as exports rose by 1.4 million barrels a day to 4.85 million.

The EIA figures landed in a market already pricing war risk in the Middle East, and Brent moved higher on the day of release. With distillate stocks thin heading into winter and crude stocks below seasonal norms, traders see little cushion if Gulf supply is disrupted further, even though the gasoline build shows consumer fuel demand softening.

Sources: Reuters