Oil prices climbed on Wednesday after industry data showed a larger than expected drawdown in crude oil stocks in the United States, the world’s largest oil consumer, and on expectations that demand will recover as vaccine roll-outs widen.
Brent crude oil rose 39 cents, or 0.5%, to $73.99 a barrel by 0133 GMT,
U.S. West Texas Intermediate (WTI) crude climbed 44 cents, or 0.5%, to $70.90 a barrel.
U.S. crude oil, gasoline and distillate stocks all fell last week, according to two market sources, citing American Petroleum Institute figures on Tuesday, after Hurricane Ida shut numerous refineries and offshore drilling production.
Crude stocks fell by 5.4 million barrels for the week ended in September. 10. Analysts on average had been expecting a drop of 3.5 million barrels.
“The impact of Hurricane Ida was a lot greater than many anticipated and production in the Gulf of Mexico region might struggle to return until Tropical Storm Nicholas is done punishing the region with torrential rain,” Edward Moya, senior analyst at OANDA.
Tropical Storm Nicholas moved slowly through the Gulf Coast on Tuesday, drenching the states of Texas and Louisiana with torrential rain, flooding streets and leaving hundreds of thousands of homes and businesses without power. Texas refineries continued to run normally, though, despite the flooding and power outages.
The damage from Nicholas comes just two weeks after Hurricane Ida knocked a significant amount of refining capacity offline in the Gulf Coast this month.
Meanwhile, after a three-month slide in global oil demand due to the spread of the delta variant of the coronavirus and renewed pandemic restrictions, vaccine roll-outs are set to power a rebound, the International Energy Agency (IEA) said on Tuesday, also helping to lift prices.
Details on China’s plans to sell crude from strategic reserves pressured prices, however, with China’s state reserves administration saying it would auction off 7.4 million barrels of crude on September 24.