Oil Ekes Out Minimal Gains On Back Of Massive U.S. Stockpile Draw

But analysts disagree on the stability of demand moving forward: File Image/Pixabay

As Hurricane Idalia swept through Florida on Thursday, jittery traders took solace in the latest U.S. crude inventory count, which showed another massive drawdown, and consequently oil prices rose, albeit minimally.

Brent settled up 37 cents at $85.86 per barrel and West Texas Intermediate settled up 47 cents to $81.63 after the Energy Information Administration reported that crude inventories fell by 10.6 million barrels in the last week to 422.9 million barrels.

Analysts in a poll expected a 3.3 million-barrel decline.

While the drop indicated that demand reigns supreme despite inflationary headwinds, strong demand in 2023 has been perceived as a worrisome thing considering the hawkish stance of the Federal Reserve and other central banks globally.

Therefore, traders presumably took some solace with John Kilduff, founding partner at Again Capital, stating that "I would expect [gasoline demand] to fall precipitously from here," referring to the fact that gasoline demand typically peaks in the summer driving season.

Ole Hansen, head of commodity strategy at Saxo Bank, said, "Ongoing demand concerns may prevent prices from having a sustained move above $90."

In other oil related news on Thursday, analysts noted that China's refiners are poised to boost diesel exports in September to more than 1 million metric tons, drawn by lucrative margins from selling overseas: Andrew Lipow, president at Lipow Oil Associates, said, "The market's interpretation is if they are exporting this much product then things are not going so well with the Chinese economy."

Meanwhile in Brazil, oil and gas production hit the highest monthly level ever in July, according to regulator ANP: oil output increased 18.6 percent Y/Y to 3.51 million barrels per day (bpd) while natural gas production grew 13.6 percent Y/Y to 154.08 million cubic meters per day.

Further, Brazil's Petrobras is expected to grow production, with output expected to increase 61 percent from 2.15 million bpd this year to 3.46 million bpd in 2030.

Also on Thursday, Vortexa data showed that Russia's crude oil exports by sea have risen to an 8-week high; however, diesel and gasoil exports fell to 1.05 million bpd in August, with gasoline and blending component exports sinking to 80,000 bpd, the lowest level in almost a year.