Oil Prices Surge Over 3% Amid Inventory Draw, Bakken Output Set to Rise

Oil prices posted sharp gains on Tuesday, with both major benchmarks climbing more than 3% as a large draw in U.S. inventories and persistent geopolitical risk supported the market. West Texas Intermediate (WTI) crude settled at $90.38 per barrel, up $2.96, while Brent crude reached $93.91, a gain of $3.48, according to live price data. Bakken crude traded at a discount of $3.42 per barrel to WTI.

The rally followed data from the American Petroleum Institute showing U.S. crude oil inventories fell by an estimated 4.4 million barrels for the week ending April 17, far surpassing analyst expectations for a 1 million barrel draw. Product inventories saw even larger declines, with gasoline stocks down 5.165 million barrels and distillates down 4.59 million barrels, according to OilPrice.com.

The inventory draw coincides with ongoing releases from the U.S. Strategic Petroleum Reserve (SPR), which saw 4.2 million barrels withdrawn last week, bringing total SPR stocks to 405 million barrels. Continued unease over the conflict in Iran was also cited as a price driver, with Brent crude up roughly $4 per barrel week-over-week.

For Bakken operators, the high-price environment is encouraging increased activity, though primarily focused on optimizing existing assets rather than launching new drilling campaigns. Nathan Anderson, Director of the North Dakota Department of Mineral Resources, said Tuesday that production in the state is expected to increase in the coming months, according to reports from World Energy News and the BoeReport.

Operators are responding to prices by boosting output from existing wells while remaining cautious about new drilling due to volatility linked to the Iran war. Anderson noted a 13% increase in the deployment of workover rigs in the state, from 110 to 125, as companies seek to maintain and optimize current production. There are currently 10 hydraulic fracturing crews operating in North Dakota, with one operator set to add another rig and crew in July.

Anderson stated that operators are making decisions based on futures prices, not daily movements, because it takes six to nine months for a new well to produce first oil. U.S. crude futures have experienced extreme volatility since the Iran conflict began, trading as high as $119.48 on March 9 and as low as $69.20 on March 2.

North Dakota's oil production rose by 4,000 barrels per day in February to reach 1.13 million bpd, according to the latest state data. Anderson expects March production figures to show a further increase.