By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil prices rose over $2 a barrel on Wednesday after government data showed a larger-than-expected drawdown in inventories, and on expectations demand will rise as vaccination roll-outs widen.

U.S. crude oil inventories fell last week to their lowest levels since September 2019 according to U.S. Energy Information Administration. This is in response to Hurricane Ida, which closed many offshore drilling operations and refineries. [EIA/S]

The price of a barrel rose $2.86 or 2.5% to $75.46. U.S. West Texas Intermediate crude oil (WTI), rose $2.15 or 3.1% to $72.61 per barrel.

Brent hit $76.13 a bar earlier in session. It was a contract record and has been the highest price per barrel since late July.

Pavel Molchanov from Raymond James, an analyst, said, “Brent pricing and WTI pricing are strongly up today, back near peaks we reached earlier in the year,”. Oil momentum continues since Hurricane Ida in August, as the Gulf of Mexico struggles to recover its production.

Last week, U.S. crude oil and distillate inventories fell further than expected. However, gasoline stocks declined slightly less than analysts anticipated.

    Crude inventories fell by 6.4 million barrels in the week to Sept. 10 to 417.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 3.5 million-barrel drop. [EIA/S]

Tony Headrick of CHS Hedging said, “We have witnessed large crude and product pulls which is supportive for the energy complex.” “The recent tropical storm impacted Hurricane Ida’s recovery efforts. For the next several reports, we will be continuing to monitor the impact of Ida.”

The slow-moving Tropical Storm Nicholas swept through the Gulf Coast Tuesday. It left hundreds of thousands of people without power. Texas, however, ran normal.

This storm is two weeks after Ida caused significant damage to the Gulf Coast’s refining capacities.

“This year’s hurricane season has a much greater and longer-lasting impact on the global oil balance than in previous years,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

The International Energy Agency (IEA) also supported oil prices, stating Tuesday that vaccine roll-outs will power a recovery after a three month slide in global oil demand caused by the spreading of the Delta coronavirus variant.

However, oil prices fell in August due to a drop in China’s crude throughput. Refinery runs were at their lowest levels since May 2020. Overall factory output is also falling.