Oil & Gas

Today, crude oil prices dipped as the Energy Information Administration(EIA) revealed a 2 million barrel reduction in U.S. crude oil inventories for the week ending March 15, accompanied by a decline in gasoline stocks. This shift contrasts with the previous week's draw of 1.5 million barrels, which also saw a notable decrease in gasoline inventories. Gasoline stocks fell by 3.3 million barrels during the week ending March 15, with daily production averaging 9.6 million barrels, compared to a 5.7 million barrel draw and 9.9 million barrels daily production the week before.

In the same period, middle distillate inventories saw a modest increase of 600,000 barrels, with daily production averaging 4.7 million barrels. These figures contrast with the previous week's inventory build of 900,000 barrels and daily production of 4.6 million barrels. Despite these inventory shifts, oil prices remain on the rise due to concerns about global fuel supply disruptions caused by drone attacks on Russian refining activity. Brent crude traded above $87 per barrel, while West Texas Intermediate surpassed $83 per barrel.

However, at the time of writing, both benchmarks were down by nearly 2% each as traders sought to capitalize on profits, and a stronger dollar hinted at weakening demand. Ukrainian forces' series of drone attacks on Russian refineries have led to the shutdown of several hundred thousand barrels in daily refining capacity, although estimates vary widely. Reuters estimates the shutdown capacity at just over 300,000 barrels per day, while Gunvor and JP Morgan offer higher estimates.

Additionally, a decrease in oil exports from Saudi Arabia and Iraq has contributed to the uptick in prices. Reuters reported earlier in the day that UBS commodity strategist Giovanni Staunovo noted, "Oil demand data is surprisingly positive, and the extension of voluntary OPEC+ cuts until the end of June has supported prices."