Oil Prices Dip Slightly Amid U.S. Inventory Draws, Production Decline

Oil prices were trading slightly lower Tuesday afternoon, with West Texas Intermediate (WTI) crude down 29 cents to $98.25 per barrel. The global benchmark, Brent crude, fell 39 cents to $109.16, according to live price data. The Bakken crude differential to WTI was -$3.42.

The minor pullback comes despite supportive fundamental data from weekly inventory reports. The American Petroleum Institute (API) estimated that U.S. commercial crude oil inventories fell by 4.93 million barrels in the week ending October 16, according to a report from OilPrice.com. This follows a draw of 11.12 million barrels the previous week.

Product inventories also declined sharply. The API report indicated gasoline stocks fell by 2 million barrels, while distillate inventories dropped by 2.6 million barrels. Distillate stocks were already 12% below the five-year average heading into the period, the report noted.

U.S. crude production also showed a notable decrease. Data for the week ending October 9 showed output slipping to 13.679 million barrels per day (bpd), down from 13.979 million bpd the week prior, OilPrice.com reported. Despite the weekly drop, production remains 43,000 bpd higher than the same time last year.

The continued draws from commercial inventories have been aided by releases from the Strategic Petroleum Reserve (SPR). For the week ending October 16, 300,000 barrels left the SPR, bringing the total down to 282.7 million barrels. The API notes the SPR is now 431 million barrels below maximum capacity, and approaching the generally accepted operational minimum of 250-300 million barrels.

The inventory at the Cushing, Oklahoma storage hub, a key pricing point for Bakken crude, increased by 900,000 barrels, following a 1.823 million-barrel build the week before.

Implications for the Bakken The steady, multi-week drawdown in nationwide inventories provides underlying support for benchmark prices, which directly benefit Bakken producers. The current WTI price near $98 represents a strong economic environment for operators in the Williston Basin.

The Bakken differential of -$3.42 indicates Bakken crude is trading at a discount to the WTI benchmark at the Cushing hub, a typical reflection of regional transportation costs. The reported build in Cushing inventories could be applying slight localized pressure on the differential.

The dip in national production, if sustained, could help tighten the supply-demand balance further, supporting prices. For Bakken operators, the combination of high absolute prices and manageable differentials supports continued drilling and completion activity, though the focus remains on capital discipline and shareholder returns.

Natural gas prices also moved lower Tuesday, trading at $2.99, down 6 cents.