Oil prices jump more than $ 2 after falling US stocks

Oil prices climbed more than $ 2 on Wednesday after industrial data showed more-than-expected contraction in US crude oil inventories, as well as expectations of increased demand as vaccinations scale up.

 

Brent crude rose $ 1.86, or 2.5%, to $ 75.46 a barrel, while US West Texas Intermediate (WTI) crude rose $ 2.15, or 3.05%, to $ 72. 61 per barrel.

 

Brent crude reached its highest level since late July and WTI since early August.

 

US stocks of crude oil, gasoline and distillates declined last week, two market sources said, citing data from the American Petroleum Institute, after Hurricane Ida shut down numerous refineries and offshore rigs.

 

Crude stocks fell 5.4 million barrels in the week ended September 10, compared with the forecast for a decline of 3.5 million barrels.

 

The US Energy Information Administration's oil inventory report is due to be released at 10:30 am EDT (1430 GMT) on Wednesday.

 

The impact of Hurricane Ida is much stronger than many expected, and production in the Gulf of Mexico may be struggling to recover until Tropical Storm Nicholas finishes punishing the region with heavy rains, "said Edward Moya, senior analyst at OANDA.

 

Tropical Storm Nicholas moved slowly along the Gulf Coast on Tuesday, leaving hundreds of thousands of homes and businesses without electricity even though Texas refineries were operating normally.

 

The storm damage occurred two weeks after Hurricane Ida disabled a significant amount of oil refining facilities on the Gulf Coast.

 

"This year's hurricane season is having a much larger and lasting impact on the global oil balance than in previous years," said Tamas Varga, oil analyst at London-based brokerage PVM Oil Associates.

 

Oil prices also received support from the International Energy Agency (IEA), which said on Tuesday that vaccine rollouts will help boost after a three-month drop in global oil demand due to the spread of the Delta coronavirus and renewed pandemic restrictions.

 

However, the rise in oil prices was halted by a drop in crude oil refining in China in August, when the daily utilization of refineries reached its lowest level since May 2020 and total production at the refineries declined.