Crude oil continued to rise as U.S. crude inventories fell as supply and demand tightened

News: On Wednesday (Oct.
20), crude oil futures closed higher as crude inventories at the largest U.
S.
crude storage site fell to a three-year low and national fuel inventories fell
sharply.

By the close, the West Texas Intermediate (WTI) December contract, the most actively traded West Texas Intermediate crude on the New York Mercantile Exchange (NYMEX), was up $0.
98 at $83.
42 a barrel
.
November WTI crude due on Wednesday closed at $83.
87 a barrel, up $0.
91 or 1.
1 percent
.

Brent crude futures, the global benchmark, for December ended up $0.
74, or 0.
9 percent, at $85.
82 a barrel, also the highest level
since October 2018.

Derunlin analysts said that as the global economy gradually recovers from the epidemic, the cold winter in the northern hemisphere is approaching, and fuel demand is growing; At the same time, U.
S.
shale producers have had a very limited increase in production, while the OPEC alliance is still steadily increasing production as previously planned, rather than accelerating it, which has led to the recent tightening
of the global crude oil supply-demand balance.
Against the backdrop of a marked increase in global inflationary pressures, this has attracted a flood of speculative money into commodity markets, including crude oil, for reflation trading
.

In the United States, U.
S.
refinery runs showed a decline in the most recent week, despite a decline
in crude oil inventories.
However, analysts pointed out that if U.
S.
refineries resume processing again, crude oil supply may continue to tighten
.
Analysts at Chicago Price Futures Group said that when refineries are running at low speed during maintenance season, people have begun to worry about strong demand and falling
inventories.
So what happens when refineries have to ramp up production to meet strong demand for gasoline and distillates?

U.
S.
crude inventories fell by 430,000 barrels in the week ended Oct.
15, rather than growing
as market expectations, according to the U.
S.
Energy Information Administration on Wednesday.
U.
S.
gasoline inventories plunged by more than 5 million barrels
last week as refineries reduced processing.
Gasoline inventories are now at their lowest level since November 2019, while distillate stocks fell to their lowest level
since early 2020, EIA said.

In Cushing, Oklahoma, crude inventories fell to their lowest level
since October 2018.

Soaring natural gas and coal prices this year have also led power plants to use more crude products to generate electricity, which also boosted additional demand for crude oil
.
Depending on winter weather and other energy product prices, the increase in demand from natural gas to oil could reach 500,000 to 600,000 barrels
per day, the Saudi energy minister said.