Key Highlights

● US crude inventories fell by about 1.9 million barrels.

● Analysts had expected a small build in stockpiles.

● Gasoline inventories rose over the same week.

● Middle East tensions remained the bigger driver of oil prices.

US crude supplies shrank unexpectedly last week, giving oil bulls another reason to push prices higher. The Energy Information Administration said commercial crude inventories fell by about 1.9 million barrels, against expectations for a small increase, while gasoline inventories moved the opposite way, rising.

Weekly inventory data is one of the most closely watched indicators in the oil market, and a larger-than-expected drawdown suggests demand is outpacing supply, which can support prices.

Why the Draw Mattered

The report landed in a market already on edge, with West Texas Intermediate crude settling back above $100 a barrel and Brent crude settling higher as well. The rise in gasoline stocks complicates the picture somewhat, since a build in refined products can signal softer demand at the pump or strong refinery output.

Refiners did not move in lockstep on the news, with Phillips 66 climbing after a strong quarter with high refinery utilization, while some rivals slipped.

Geopolitics Did the Heavy Lifting

The inventory draw was a supporting act. The main driver was a claim by Yemen's Houthis that they fired a ballistic missile at Saudi Arabia's Ras Tanura refinery, a claim Riyadh has not confirmed, followed by an attack on Aden airport a day later.

Tight supplies and high prices feed directly into inflation concerns, and the Federal Reserve's own statement flagged that inflation remains elevated, with bond markets reflecting those worries as long-dated Treasury yields climbed.