Oil prices gain amid steep drop in inventories as gasoline stockpiles rise

Ines Ferré

Oil futures rallied amid the largest crude inventory drop since July, which was offset by an increase in gasoline stockpiles.

West Texas Intermediate (CL=F) gained almost 1% to settle at $75.09 a barrel. Brent (BZ=F), the international benchmark price, rose fractionally to close at $80.04 per barrel.

Crude inventories decreased by 9.23 million barrels last week, versus analyst expectations of a draw of 1.4 million barrels. Meanwhile, gasoline supplies increased by nearly 5 million barrels to a three-year high, according to data from the Energy Information Administration.

A gasoline build is "a bearish factor and will keep crude in a nervous trade," said Dennis Kissler, senior vice president at BOK Financial, on Wednesday.

The data released Wednesday morning underscores the extent to which freezing temperatures impacted production, stockpiles, and refining capacity. Refineries operated at 85.5% of their operable capacity last week, according to EIA data.

A cold snap across the US recently curtailed oil production in North Dakota. Imports and exports were also impacted following a temporary halt of operations at Houston and Freeport, Texas, ports due to freezing temperatures.

Oil has been trading within a tight range as traders assess the conflict in the Middle East and supply restraints.

Libya’s oil production returned to 1.2 million barrels per day this week following an interruption of three weeks due to protests over fuel shortages.

Russian crude exports were temporarily impacted by a recent Ukrainian drone strike against a key fuel terminal in the Baltic Sea region. The damaged site has partially resumed exports.

ANKARA, TURKIYE - JANUARY 23: An infographic titled 'US, UK have hit 91 targets in Yemen so far' created in Ankara, Turkiye on January 23, 2024. The US and the UK have so far targeted 91 locations belonging to Iran-backed Houthis in Yemen, who have carried out attacks on ships traveling from the Red Sea to Israel under the pretext of support to Gaza. (Photo by Yasin Demirci/Anadolu via Getty Images)
The US and the UK have so far targeted 91 locations belonging to Iran-backed Houthis in Yemen, who have carried out attacks on ships traveling from the Red Sea to Israel under the pretext of support to Gaza. (Yasin Demirci/Anadolu via Getty Images) (Anadolu via Getty Images)

Earlier this week the US and UK continued retaliatory strikes against Houthi-controlled areas in Yemen. The rebels backed by Iran have been targeting vessels making their way through the Red Sea, prompting companies to suspend or reroute their shipments away from the area.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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