On Wednesday (October 20), oil prices hit a new high after the U.S. government reported an unexpected decline in crude oil inventories, easing concerns that rising prices would weaken demand. As of press time, US WTI crude oil futures in November rose 82 cents, or 0.99%, to US $83.26/barrel; Brent December futures rose 62 cents, or 0.73%, to $85.70 a barrel.

According to a report by the US Energy Information Administration (EIA), domestic crude oil inventories decreased by 431000 barrels last week.

Rob thummel, portfolio manager of tortoise, said: "this is only a sign of sustained economic recovery, as well as the basic nature of crude oil related products and their role in the recovery. The fear of demand destruction is really not obvious."

Oil prices rose due to the energy crunch caused by coal and natural gas shortages and the rebound in demand in economies recovering from the pandemic. In recent weeks, Wall Street has been steadily raising its estimates of oil prices. BNP Paribas, the latest bank to do so, raised its forecast by $8 to $80.50 a barrel.

The US report also showed that despite rising consumer prices, demand for distillates and gasoline increased and refined product inventories were strong. Gasoline inventories fell by 5.37 million barrels to the lowest level since November 2019. Measured by the four week average, gasoline demand is at the highest level since 2007.

Globally, refineries have been increasing production due to high profit margins, which can only be limited by maintenance. The use of refining capacity in the United States decreased in the recent week, but analysts pointed out that if U.S. refineries resume processing again, supply may continue to tighten.

Phil Flynn, senior energy analyst at price futures group, said: "when refineries are already running at a low speed during the maintenance season, strong demand and concerns about falling inventories raise concerns about what will happen to the market when refineries must increase production to meet very strong demand for gasoline and distillates."

Oil prices also rose on expectations that generators could switch to oil to provide electricity, as global natural gas and coal prices soared. Saudi Arabia's energy minister said that, depending on winter weather and other energy prices, the demand of users switching from natural gas to oil could reach 500000-600000 barrels a day.