Crude oil prices fell today after the U.S. Energy Information Administration (EIA) announced an inventory increase of 5.5 million barrels for the week ending October 18.
This increase followed a report from the American Petroleum Institute (API), which estimated a build of 1.64 million barrels during the same period. In contrast, the EIA reported a draw of 2.2 million barrels for the previous week.
For gasoline, the EIA reported an inventory increase of 900,000 barrels for the week ending October 18, with production averaging 10 million barrels per day. This is a change from the previous week, which saw a decline of 2.2 million barrels and daily production of 9.3 million barrels.
In the middle distillates category, the EIA noted an estimated inventory draw of 1.1 million barrels, with average daily production at 5 million barrels. This was also a shift from the previous week, which had a larger draw of 3.5 million barrels, while production stood at 4.8 million barrels daily.
Oil prices dipped on Tuesday after the API released its inventory estimate. The increase in crude oil stocks was larger than analysts expected, which affected market confidence, even though the overall numbers were not alarming.
Additionally, tensions in the Middle East are putting pressure on oil prices. Israel has intensified its attacks on Gaza and Lebanon, recently killing Hashem Safieddine, the expected successor to the Hezbollah leadership. This has raised concerns about potential retaliation.
“Market participants expect the Middle East conflict to prolong, and a ceasefire deal might face delays,” said IG analyst Yeap Jun Rong in comments to Reuters.
Warren Patterson and Ewa Manthey from ING noted that traders are closely monitoring the situation in the Middle East. However, uncertainty remains about the future of these events, which could influence trading behavior.
“The uncertainty surrounding this situation may make speculators cautious about taking short positions in the market. Many had already been short due to concerns over demand and a bearish outlook for 2025,” they explained in a recent note.
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