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NEW YORK: Oil prices jumped more than 4% on Wednesday, following a drawdown in US crude and gasoline inventories and as Hurricane Sally forced a swath of US offshore production to shut.
Brent crude rose $1.64, or 4.1%, to $42.17 a barrel by 12:51 p.m. EDT (1651 GMT), while US crude gained $1.85, or 4.8%, to $40.13.
US crude stocks fell 4.4 million barrels last week to 496 million barrels, their lowest since April, the US Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel rise.
US gasoline stocks fell 400,000 barrels, the EIA said, more than double the draw forecast, despite a 4 percentage point hike in refining utilization rates.
“The inventory numbers are significant – refineries seemed to jump back to activity, gasoline demand jumped back so that’s definitely positive,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It seems that we’re back on the track of the drawdown on supplies.”
Sally, which made landfall on the US Gulf Coast as a Category 2 hurricane, also boosted oil prices as more than a fourth of offshore output shut due to the storm.
Nearly 500,000 barrels per day (bpd) of offshore crude oil production was taken offline in the US Gulf of Mexico, according to the US Interior Department, roughly a third of the shut-ins caused by Hurricane Laura, which landed farther west in August.
Oil collapsed to historic lows as the coronavirus crisis hit demand. A record supply cut by OPEC and its allies, a grouping known as OPEC+, and an easing of lockdowns have helped Brent recover from a 21-year low below $16 in April.
Prices have sunk in September, pressured by rising coronavirus cases and concerns about demand.
The Organization of the Petroleum Exporting Countries and International Energy Agency both cut their demand outlooks this week.
A panel of OPEC+ oil ministers meets to review the supply pact on Thursday and is unlikely to recommend further output curbs despite the price drop, sources told Reuters.