Crude oil prices moved higher after the Energy Information Administration reported a crude oil inventory build of 500,000 barrels for the week to October 2. A larger decline in gasoline and distillate stocks and a sizeable increase in production, however, were more bullish.

This compares with a 2-million-barrel draw estimated for the previous week and analyst expectations for a moderate build of less than 300,000 bpd.

A day earlier, the American Petroleum Institute estimated an inventory build of close to 1 million barrels, which contributed to a price decline that began last week on renewed fears about demand as Europe continued tightening restrictions to stem the spread of the coronavirus.

In gasoline, the EIA reported an inventory decline of 1.4 million barrels for the week to October 2, which compared with a decline of 700,000 barrels for the previous week. Gasoline production averaged 9.5 million bpd last week, compared with 8.9 million bpd a week earlier.

In distillate fuels, the authority estimated a draw in stocks totaling 1 million barrels, compared with a decline of 3.2 million barrels reported for the previous week as excessive stocks continued to drain, albeit rather slowly.

As of the last week of September, distillate inventories in the U.S. were about 20 percent above the five-year average, but that was down from an excess of 22 percent as of the end of August, Reuters’ John Kemp noted in a recent column. If this rate of drawdowns continues, the excess could be gone by March next year, he said.

Last week, distillate fuel production averaged 4.5 million bpd, which compared with 4.4 million bpd a week earlier.

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Refineries in the U.S. processed 13.9 million bpd last week, compared with 13.7 million bpd a week earlier.

Prices remain pressured after a moderate recovery last week as demand concerns remained strong amid pessimistic economic data from key markets, including the United States. A stronger greenback did not help the appeal of crude oil, which trades in dollars internationally. Libya’s quick ramp-up of production and a call from the central bank’s governor to boost output to 1.7 million bpd will also likely have a negative effect on benchmarks.

By Irina Slav for Oilprice.com

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