Oil Prices Edge Higher as U.S Stockpiles Hit 3-Year Low
Crude oil prices edge higher on Wednesday as the United States (U.S) crude stockpiles fall to lowest in 3 years, gasoline builds, according to Energy Information Administration (EIA).
The International benchmark Brent crude was trading at $75.44 per barrel, representing a 1.45% uptick from $74.36 a barrel yesterday. American benchmark West Texas Intermediate (WTI) was at $71.58 per barrel at the same time for a 1.54% increase after it ended the previous session at $70.49 a barrel.
U.S. crude oil inventories last week fell to their lowest in nearly three years while gasoline stockpiles rose, the Energy Information Administration said on Wednesday, as the industry continued to recover after Hurricane Ida.
Also pushing the prices momentum, the American Petroleum Institute estimated a more-than-expected drop in US crude oil stockpiles. The institute predicted a drop in US crude oil stockpiles of 6.11 million barrels, more than the market expectation of a fall of 2.40 million barrels.
The forecast of a larger inventory draw signals a recovery in crude demand in the US, easing investor concerns about declining demand, which, in turn, supports higher prices.
Crude inventories fell by 3.5 million barrels in the week to Sept. 17 to 414 million barrels, Inventories now sit at their lowest levels since October 2018, and that tightness, along with strong demand, has helped drive oil prices higher.
Weekly figures on refining activity and oil production showed a return to pre-hurricane activity. Crude production jumped 500,000 barrels per day in the week to 10.6 million bpd, as Gulf offshore facilities resumed operations.
However, supply is expected to remain tight from continuous supply disruptions in the US Gulf of Mexico from Hurricane Ida, which hit the region at the end of August.
The disruption from the region’s largest oil producer, Shell, will continue through the year-end as the company assessed significant structural damage in some of its offshore facilities.
Soaring natural gas prices in Europe ahead of the winter season continue to support the upward trend in prices, while investors are still concerned about the wider market effect of China’s Evergrande debt crisis.
The announcement of the Fed monetary policy decisions is due to be announced late Wednesday. The central bank may signal an interest rate hike by late 2022, and begin tapering – the process of reducing accumulating $120 billion monthly assets on its balance sheet – next month.
Undercutting the optimism, U.S. gasoline stocks rose by 3.5 million barrels to 221.6 million barrels, compared with expectations for a 1.1 million barrel drop.
Read Also: Oil Records Moderate Increase as U.S Stockpiles Decline
Distillate stockpiles, which include diesel and heating oil, fell by 2.6 million barrels versus expectations for a 1.2 million-barrel drop. Net U.S. crude imports rose last week by 519,000 barrels per day, the EIA said.
Oil Prices Edge Higher as U.S Stockpiles Hit 3-Year Low
