Crude oil prices surged today following a report from the U.S. Energy Information Administration (EIA) confirming a substantial inventory decline of 12.2 million barrels for the week ending June 28. This follows an inventory build of 3.6 million barrels the previous week, which had weighed on oil prices.
In the last week of June, the EIA also reported draws in fuel inventories, with gasoline inventories dropping by 2.2 million barrels compared to a build of 2.7 million barrels the previous week. Gasoline production averaged 10.1 million barrels daily, up from 9.9 million barrels daily the week before.
Middle distillates saw an inventory decline of 1.5 million barrels, a significant increase from the modest draw of 400,000 barrels the previous week. Production of middle distillates averaged 5.1 million barrels daily, up from 4.9 million barrels daily the week before.
Oil prices, already at two-month highs, received further support after the American Petroleum Institute estimated a weekly inventory draw of 9 million barrels. Geopolitical factors have also contributed to the price rise, with traders concerned about escalating violence in the Middle East as Israel continues to bomb Gaza. However, fears of production disruption in the Gulf of Mexico due to Hurricane Beryl subsided as the hurricane weakened to a tropical storm.
“The key risk for oil markets is that an Israel-Hezbollah war widens into a broader conflict,” Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. “In particular, the more direct involvement of Iran in an Israel-Hezbollah war may put at risk Iran’s oil supply and related infrastructure.”
Additionally, signs of a slowdown in U.S. oil production growth and recent oil export data showing Saudi Arabia accounted for half of a global oil export decline of 1 million barrels daily last month have also supported oil prices.
