Oil Ekes Out 4th Monthly Gain After U.S. Inventory Beat

© Reuters.

By Barani Krishnan 

Investing.com —  Oil headed toward its best week in five on Friday after outsized U.S. draws in everything, from crude to gasoline and diesel, helped bulls put the market back on a positive track.

New York-traded West Texas Intermediate crude and London’s Brent also posted modest gains for July, extending oil’s positive run to a fourth straight month.

An hour to settlement, WTI was up 33 cents, or 0.5%, at $73.95 per barrel by 1:10 PM ET (17:30 GMT). The benchmark for U.S. oil was up 2.6% for the Monday-Friday stretch, marking its best week in five. It also showed a gain of 0.7% for July.

Brent, the global benchmark for oil, was up 32 cents, or 0.4%, at $75.42 on the day. For the week, Brent was showing a rise of 1.8%. If that holds through the close, it would be its best week in six. For July, Brent showed a 0.4% gain.

After a soft start to the week, oil’s upside was restored by data from the Energy Information Administration showing a crude inventory drop of 4.089 million barrels during the week to July 23, compared with analysts' expectations for a draw of 2.928 million barrels.

The big drawdowns in crude came as refiners focused on pushing out as much gasoline as they could this summer to meet projected demand for the peak U.S. driving season. 

According to the EIA, refiners operated at 91.1 percent of capacity for the week to July 23, not far from highs seen during the pre-pandemic summer of 2019. 

Gasoline stockpiles on their own fell by 2.25 million barrels for the week to July 23, against a forecast 1.24 million. 

The outperformer for the week, however, was diesel-heavy distillates, which drew down by 3.1 million barrels, more than quadruple the forecast decline of 700,000. The outsized draw shows that demand for trucking and other commercial vehicle fuel was as strong as the consumption of gasoline.

Oil prices were held back earlier in the week after a new surge in Covid cases from the Delta variant of the virus posed headwinds for the market. 

While investor risk appetite in oil has grown in recent days, allowing bulls to regain control of the market, the emergence of new Covid threats in the U.S. and elsewhere makes the path more challenging compared with earlier in the year when crude prices rose almost without stop week after week.