Crude oil posts solid gains on large U.S. inventory drawdown, Russia-Ukraine talks

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Crude oil futures closed higher Wednesday following a weekly report [https://seekingalpha.com/news/4487445-crude-inventory-falls-by-60mm-barrels-for-week-ended-august-15-eia] from the Energy Information Administration that showed a bigger than expected 6M-barrel decline in U.S. inventories, leaving domestic stocks 6% below the five-year average, while imports fell, exports rose, and refineries maintained high capacity use.

The EIA also said gasoline inventories fell by 2.7M barrels, leaving them 1% below the five-year average, even as the agency reported implied gasoline demand - which it estimates as product supplied to the market - dropped last week by 158K bbl/day to 8.84M bbl/day, and as U.S. refinery utilization inched higher last week to 96.6% of capacity; also, distillate stocks rose last week by 2.3M barrels, but remain about 13% below the five-year average.

"We had a decent-sized crude drawdown. We saw a rebound in exports... that and the strong refinery demand really makes this a bullish report," Again Capital partner John Kilduff said in a note.

Investors also are monitoring progress toward a Russsia-Ukraine ceasefire, as the U.S. and military officials from NATO reportedly discussed security measures for Ukraine that could help forge a peace agreement, which could lead to fewer restrictions on Russia's crude exports, although Russia has largely kept its oil flowing despite various sanctions.

Russia expects to continue supplying oil to India [https://www.reuters.com/world/india/russia-expects-india-keep-buying-its-oil-seeks-china-india-russia-talks-2025-08-20/] despite warnings from the U.S., Russian embassy officials in New Delhi said Wednesday.

Despite near-term support from lower inventories, the longer-term outlook is bearish, MUFG analysts said in a note, with a supply glut expected as OPEC+ restores production, a potential Russia-Ukraine peace deal, and trade tensions that are weighing on demand.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for September delivery closed +1.4% to $63.21/bbl, front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for October delivery settled +1.6% to $66.84/bbl, while front-month Nymex September natural gas fell for the third straight session, -0.5% to $2.752/MMBtu.

ETFs: (NYSEARCA:USO [https://seekingalpha.com/symbol/USO]), (BNO [https://seekingalpha.com/symbol/BNO]), (NYSEARCA:UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH]), (USOI [https://seekingalpha.com/symbol/USOI]), (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (KOLD [https://seekingalpha.com/symbol/KOLD]), (UNL [https://seekingalpha.com/symbol/UNL]), (FCG [https://seekingalpha.com/symbol/FCG]), (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE])

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