On Wednesday, oil prices increased as much as 2% following surprise decline in crude stockpiles reported by the U.S. government for a third consecutive week. The U.S. Energy Information Administration (EIA) noted that domestic crude inventories declined by 6.2 million barrels for the week ended Sept. 16, versus a 3.4 million-barrel decline projected by oil market analysts polled by economist.
Crude stocks in the world’s biggest oil consumer have dropped since this month started. Roughly 14.5 million barrels were reported drawn for the week ended Sept. 2, the largest weekly decline in 15 years following a tropical storm that slowed the arrival of oil imports in the U.S. Gulf Coast. In the succeeding week to Sept. 9, there was another drop of 559,000 barrels.
While the draws have put a bullish sentiment of sorts on oil, they also conflict with hiking production from OPEC and other major producers such as Russia, causing a swing in crude prices recently.
“We are still very well supplied for this time of year,” stated Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors.
Brent crude futures LCOc1 increased 80 cents, or 1.8 percent, at $46.68 per barrel by 11:03 a.m. EDT (1503 GMT). They had increased greater than $1.20 at the session high. U.S. West Texas Intermediate (WTI) crude futures CLc1 hiked $1.05 cents, or 2.4 percent, at $45.10, versus a session high of $45.49. Some market participants also expressed surprise with the crude draw announced by the EIA when crude imports as a whole rose and refinery runs fell.
U.S. crude imports increased last week by 77,000 bpd, although they fell sharply in the U.S. Gulf, dropping to 2.88 million bpd from 3.41 million bpd in the previous week. Refinery crude runs declines by 143,000 barrels per day, EIA data displayed. Refinery utilization rates declined by 0.9 percentage points.