Investing.com - Khalid al-Falih should be smiling.
The Saudi Energy Minister's squeeze on oil exports are making a greater mark in weekly U.S. data. The latest statistics from the U.S. Energy Information Administration show a drop of more than 1 million barrels last week that took the kingdom's shipments to the United States to near-decade lows.
Oil prices, already trending higher on sanctions imposed on Venezuelan oil by the Trump administration, rallied by more than 2% for a second day running, with West Texas Intermediate crude, particularly, hitting 10-week highs that just fell short of $55 per barrel.
New York-traded WTI was up by $1.53, or 2.9%, at $54.84 per barrel by 12:10 PM ET (17:10 GMT) after reaching a session peak of $54.92. The last time WTI hit such highs were on Nov. 20.
London-traded Brent, the global oil benchmark, gained $1.21, or 2%, to $62.41. Its session high was $62.50.
Crude prices as a whole surged as U.S. refiners scrambled for domestic sources of sulfur-laden oil, also known as sour crude, that's needed for making diesel and other transportation fuels. Sour crude typically comes from origins like Venezuela, Mexico, Canada, Saudi Arabia and other Middle East destinations. Scarcity of these heavier oils have caused them to fetch premiums of more than $7 per barrel against lighter variants like WTI over the past week.
The EIA data show that "the precipitous drop in imports from both the Saudis and the Middle East has helped stave off another big build to crude stocks," said Matthew Smith at New York-based crude cargoes tracker Clipperdata.
"A plunge in refining activity, a seasonal trend as we dive into seasonal maintenance, has also yielded the first weekly drop in five for gasoline inventories," he added.
The EIA reported that U.S. crude inventories as a whole rose by 919,000 barrels for the week ended Jan. 25, versus analysts' expectations for a rise of 3.2 million. In the previous week to Jan. 18, crude inventories rose by a huge, unexpected 8 million barrels.
The EIA data showed last week's smaller build was directly related to a slump of 1.1 million barrels in imports. A Bloomberg chart on weekly U.S. crude imports showed the latest intake from Saudi Arabia at 442,000 barrels, the lowest since 2010.
The EIA also reported that gasoline stockpiles fell by 2.2 million versus forecasts for a gain of 1.9 million barrels. Gasoline inventories jumped 4 million in the previous week to reach a record high of almost 260 million barrels. Last week's drop, the first in nine weeks, came as refinery runs fell by 586,000 barrels to just at about 90% of their capacity, versus typical run rates of 96% and above.
Inventories of distillates, which produce diesel and other commercial fuels, decreased by 1.1 million barrels, falling for a second week in a row after the squeeze on sour crudes. Analysts had expected distillates to show a 1.4 million barrel decline. In the previous week, distillates fell by 620,000 barrels.