Crude oil inventories in the United States shed 7.2 million barrels in the week to June 26, the Energy Information Administration reported.
Analysts had expected an inventory decline of 710,000 barrels for the period, and the American Petroleum Institute had estimated a sizeable inventory draw, to the tune of 8.156 million barrels, the largest inventory draw so far this year.
For the previous week, the EIA reported an inventory build, at 1.4 million barrels, after another moderate build, of 1.2 million bpd, for the week before.
Oil inventories remain above the five-year average for this time of the year, but refinery runs for the past few weeks suggest demand for fuels is increasing, albeit slowly.
Last week, these averaged 14 million bpd, compared with 13.8 million bpd a week earlier, and 13.6 million bpd two weeks earlier.
Gasoline production averaged 8.9 million bpd in the week to June 26, up from 8.8 million bpd a week earlier. Gasoline inventories added 1.2 million barrels last week, after a weekly draw of 1.7 million barrels for the week to June 19.
Distillate fuel production averaged 4.6 million bpd last week, versus 4.6 million bpd a week earlier. Distillate fuel inventories shed 600,000 barrels in the week to June 26. Distillate fuel demand has been slower to recover as air transport remains limited amid the continuing pandemic.
Meanwhile, the continued increase in new Covid-19 cases in the United States continued to weigh on oil prices this week. API's report on crude oil inventories gave WTI a momentary respite, but in a day, the benchmark was down again, trading at $39.59 a barrel at the time of writing. Brent crude was trading at $41.55 per barrel.
A Tuesday announcement by Shell that it will take a writedown of up to $22 billion on its assets because of the oil price crash enhanced a feeling of pessimism for the immediate future of the oil industry, with more such announcement expected.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More