EIA crude stockpiles drop 1.69 million barrels as supply tightens

US crude oil inventories swung from a build to a draw last week, falling 1.69 million barrels as the market digested a smaller-than-expected decline that nonetheless signaled tightening supply conditions.

"The reversal from a substantial build to a draw points to a market where supply is struggling to keep pace with demand," said Omar Tariq, a commodities strategist covering oil markets. "The miss versus consensus is marginal, but the directional shift is what matters for price action."

The Energy Information Administration reported Wednesday that commercial crude stockpiles stood at approximately 440 million barrels for the week ending July 10. The draw compared with Bloomberg user expectations for a 2 million barrel decline and analyst forecasts for a 1.962 million barrel drop. It marked a sharp reversal from the prior week's 2.998 million barrel build.

WTI crude futures traded near $79.33 a barrel, while Brent crude hovered around $84.30, as traders weighed the inventory data against broader geopolitical risks. The draw comes amid heightened Middle East tensions after the U.S. reinstated a blockade on Iran, which has slowed vessel traffic through the Strait of Hormuz and pushed oil prices higher in recent sessions.

The inventory swing reflects a market where refinery runs have picked up seasonally while imports have moderated. EIA data showed crude oil imports fell by 399,000 barrels per day last week, while refinery crude runs increased by 99,000 barrels per day. Gasoline inventories also declined by 1.533 million barrels, suggesting firm demand at the pump during the summer driving season.

The last time crude inventories swung from a build of this magnitude to a draw was in April, when stockpiles fell 1.8 million barrels after a 3.2 million barrel build the prior week. WTI rose about 4 percent in the two weeks following that reversal.

Looking ahead, traders will focus on next week's inventory data for confirmation of the tightening trend, as well as any further escalation in U.S.-Iran tensions that could disrupt flows through the Strait of Hormuz, through which about 20 percent of global oil passes.

This article is for informational purposes only and does not constitute investment advice.