West Texas Intermediate (WTI) crude prices today are back above $48 per barrel (/b) following yesterday’s news of a significant drawdown in U.S. crude oil and gasoline inventories. Oil prices also received support from a weaker U.S. dollar, although the dollar appears to have stabilized today. The dollar declined following President Donald Trump’s threats to shut down the U.S. government if Congress does not fund the wall between the U.S. and Mexico. The Dow Jones Industrial Average also fell by 0.4%. Today, attention is turning to the central bankers’ annual conference in Jackson Hole, Wyoming, which is shifting focus toward global economics and away from U.S. politics.

Oil prices had been weakening Monday and Tuesday, but the downward trend halted when the American Petroleum Institute (API) reported that it expected a significant drawdown of 3.595 million barrels (MMbbl) from U.S. crude inventories this week. The price impact was muted by the report of a 1.402-MMbbl addition to gasoline inventories plus a 2.048-MMbbl addition to diesel inventories.

Subsequently, the Energy Information Administration (EIA) released the official data on weekly supply and demand, and the outlook was significantly more bullish. The EIA reported a significant drawdown of 3.327 MMbbls from crude inventories, plus a drawdown of 1.223 MMbbls from gasoline inventories, rather than the addition expected by the API. The additions to diesel inventories were small, just 0.028 MMbbls. Prices began to rise, and WTI crude prices gained $0.77/b yesterday.

The EIA data also showed a bump-up of 107 thousand barrels per day (kbpd) in apparent weekly demand for gasoline. Gasoline demand for the week ended August 18 averaged 9,629 kbpd, relative to 9,522 kbpd during the week ended August 11. However, Diesel demand dropped by 145 kbpd, falling from 4,222 kbpd last week to 4,077 kbpd during the week ended August 18.

Oversupply should continue to be a concern. U.S. crude production rose once again, hitting a new high for the year of 9,528 kbpd, up by 26 kbpd from the prior week. This was the highest level of production since the week ended July 17, 2015.

WTI crude opened at $48.36/b this session, an increase of 72 cents from yesterday’s opening. Currently this morning, WTI prices are $48.20/b, a drop of 16 cents since today’s opening. The daily price range has been $48.08/b – $48.43/b.