U.S. Oil Inventories Fell by 1.7 Million Barrels Last Week: EIA

By Liz Moyer

Investing.com -- U.S. crude oil inventories fell by more than expected last week, according to the Energy Information Administration (EIA).

Crude oil inventories dropped by 1.725 million barrels, against expectations for a build of 1.38 million barrels, the EIA reported.

The crude stockpile build came on the back of a drawdown of 3.6 million barrels from the U.S. Strategic Petroleum Reserve (SPR), which was one of the smallest in months. The Biden administration has drawn down twice as much or more from the SPR in recent weeks in a bid to flood the domestic market with crude supply and keep pump prices of gasoline low. Since November 2021, more than 200 million barrels have left the nation's emergency oil stockpile, resulting in SPR balances standing at their lowest since 1984.

President Joe Biden is slated to announce later on Wednesday a further release of 15 million barrels from the SPR, according to media reports. The new releases are to offset upward price pressure on crude from OPEC+'s announcement earlier this month that the oil-producing alliance will cut 2 million barrels per day from global supply from November onwards. Gasoline prices at U.S. pumps reached a record high of $5 in mid-June but have come down since to well below $4 on average.

"The SPR releases have become a political hot potato ahead of the November mid-term elections, with Biden's rivals accusing him of risking the nation's emergency oil reserves to try and appease voters and defend his Democrats' control of Congress and Senate," said Investing.com analyst Barani Krishnan. "The president, meanwhile, counters that alleviating the hardship of Americans suffering from the worst inflation in 40 years, contributed significantly by high energy prices, is his top priority."

The EIA also reported that distillate stockpiles rose by 0.124 million barrels last week. The expectation had been for a draw of 2.167 million barrels.

Gasoline inventories, meanwhile, dropped by 0.114 million barrels, against expectations for a draw of 1.114 million barrels, the EIA said.