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US commercial crude oil inventories fell by 865,000 barrels to 409.8 million barrels in the week ended October 30, defying analysts' expectations for an 877,000-barrel build in a Reuters poll. Stocks remained 4% below the five-year average, with the unexpected draw coming despite a sharp decline in crude exports and an increase in net imports.

US crude exports plunged by 1.18 million b/d from the previous week to 3.66 million b/d, while crude imports edged down by just 1,000 b/d to 6.4 million b/d. The four-week average of crude imports stood at 6.1 million b/d, up 9.5% from the corresponding period a year earlier.

The sharp reduction in exports lifted net crude imports by 1.18 million b/d to 2.70 million b/d, indicating greater volumes of crude remained within the domestic market. The inventory draw therefore ran counter to the additional supply implied by the higher net imports.

Meanwhile, US domestic crude production edged up by 11,000 b/d to 14.0 million b/d, adding marginally to domestic supply.

Total motor gasoline inventories decreased by 200,000 barrels over the week, leaving stocks 2% below the five-year average.

The unexpected crude inventory draw provides a supportive signal for the US oil market, particularly against expectations of a stock build and rising domestic production. However, the sharp decline in exports and resulting increase in net imports complicate the supply picture, making subsequent inventory movements important in assessing the underlying strength of domestic crude demand.

Written by: Farid Muzaffar