Oil rises on big decline in U.S. crude stocks By Reuters
By Sonali Paul
MELBOURNE (Reuters) – Oil prices rose around 1% on Wednesday, extending overnight gains, after industry data showed stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves.
U.S. West Texas Intermediate oil futures rose 75cs (1.1%) to $71.24/barrel at 0131 GMT. That’s a 3 cent increase over Tuesday.
Futures gained 44 cents after Tuesday’s gain of 68 cents or 0.9% to $75.04/barrel.
The oil market turned its attention to tight supply after Monday’s market turmoil over China Evergrande Group’s possible default.
U.S. crude oil stocks dropped by 6.1 Million barrels in the week ending Sept. 17. Market sources cited figures released Tuesday by the American Petroleum Institute.[API/S]
This was a far greater drop than the 2.4million barrel decrease in crude inventories that 10 analysts polled at Reuters expected.
To confirm large drops in fuel and crude oil stocks, the market will monitor data released by the U.S. Energy Information Administration (USEIA) on Wednesday.
The supply will remain tight as Royal Dutch Shell (LON), the biggest U.S. Gulf of Mexico oil producer, stated that damage to its offshore transfer facility would reduce production until early next year.
The API data revealed that gasoline inventories decreased by 432,000 barrels. Distillate stocks, which includes jet fuel, also fell by 2.75 million barrels. These figures were provided by anonymous sources.
It comes at an era when demand for jet fuel is increasing.
In a note, ANZ commodity analysts stated that market sentiment was supported by the lifting of U.S. travel bans.
Sources told Reuters that some oil producers from the Organization of the Petroleum Exporting Countries (OPEC+) are having difficulty increasing their output to meet their targets. The largest part of the shortage is coming from Nigeria and Angola.
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