Oil Rallies After Largest Weekly Crude-Supply Drop Since 1999
Oil futures on Thursday were set to log their highest settlement in about two weeks, after U.S. government data revealed the largest drop in crude supplies since 1999.
The 14.5 million-barrel decline reported by the Energy Information Administration was even larger than the surprise 12.1 million-barrel drop reported by the American Petroleum Institute late Wednesday. Ahead of both reports, analysts polled by S&P Global Platts expected a 425,000-barrel climb.
“The large draw in crude oil inventory was driven by a large decline this week in crude oil imports, primarily weather-related, while refinery runs continued to be quite strong,” Robert Merriam, manager of Petroleum Supply Statistics at the EIA, told MarketWatch.
Oil prices also found support from data from China showed another big increase in the country’s crude imports.
October West Texas Intermediate crude CLV6, +4.29% added $1.83, or 4%, to $47.33 a barrel on the New York Mercantile Exchange. November Brent crude on London’s ICE Futures exchange LCOX6, +3.86% rose $1.82, or 3.8%, to $49.80 a barrel.
A settlement around these levels for both crudes would be the highest since Aug. 26, according to FactSet data.
“Crude supply was down dramatically on lower imports,” said James Williams, energy economist at WTRG Economics. “Imports fell because of ships delayed” by last week’s storm.
Weekly net crude imports fell by about 1.8 million barrels a day, the EIA said.
“We should see a spike in oil prices gradually reversed after the realization of the shipping delay sinks in,” Williams said. “Next week we will see a spike in imports and crude stocks as the delayed ships are unloaded.”
At the peak, as much as 22.1% of oil production in the Gulf of Mexico was halted on Aug. 30 due to a tropical depression in the region, which later became Hurricane Hermine, according to the Bureau of Safety and Environmental Enforcement. As much as 10.6% of natural-gas output was shut in, on Aug. 31, because of the storm.
The EIA data showed that total domestic production edged down by 30,000 barrels a day last week to 8.458 million barrels a day, though output rose by 15,000 barrels a day in the lower 48 states.
Gasoline supplies fell 4.2 million barrels, while distillate stockpiles rose by 3.4 million barrels, according to the EIA. The market was looking for a drawdown of 625,000 barrels for gasoline, while distillate stockpiles were seen up 1.1 million barrels, according to the S&P Global Platts survey of analysts.
On Nymex, October gasoline RBV6, +5.00% rose 6.7 cents, or 5%, to $1.414 a gallon and October heating oil RBV6, +5.00% tacked on 5 cents, or 3.5%, to $1.476 a gallon.
Separately, the EIA reported a weekly rise of 36 billion cubic feet for natural-gas supplies. That was below the average rise of 41 billion cubic feet expected by analysts polled by S&P Global Platts.
October natural gas NGV16, +4.00% was up 11.8 cents, or 4.4%, at $2.794 per million British thermal units.
Source: Market Watch
