Rising Oil Prices Due to U.S. Inventory Withdrawals and Hurricane Concerns

Oil prices continued to gain on Wednesday as industry data showed a significant drop in crude inventories in the United States, the world’s largest fuel consumer. Meanwhile, an approaching hurricane in the Gulf of Mexico kept investors cautious.

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Crude Oil Prices
Market Overview

Crude Oil Prices

Brent crude futures for October delivery rose by 55 cents, or 0.64%, to $86.04 per barrel by 11:14 AM GMT. The October contract is set to expire on Thursday, with the more active November contract trading at $85.42, up 51 cents.

Futures for West Texas Intermediate (WTI), the U.S. benchmark, increased by 59 cents, or 0.73%, to $81.75.

The benchmark crude grades gained over a dollar on Tuesday as the weakening U.S. currency, following weak job data in the United States, reduced the likelihood of interest rate hikes.

Sources citing data from the American Petroleum Institute reported on Tuesday that U.S. crude inventories had fallen more than expected by around 11.5 million barrels for the week ending on August 25.

Toshitaka Tazawa, an analyst at Fujitomi Securities, indicated that the drop points to strong demand.

Investors were also monitoring Hurricane Ida as it moved over the Gulf of Mexico, east of major oil and natural gas production sites in the United States. This region accounts for approximately 15% of U.S. oil production and about 5% of natural gas production, according to the Energy Information Administration.

Market Overview

Major oil company Chevron (NYSE: CVX) evacuated some personnel from the region, but production is ongoing.

Meanwhile, IIR Energy Research stated on Wednesday that U.S. oil refineries are expected to witness a daily decrease of 119,000 barrels in refining capacity for the week ending September 1, compared to the previous week.

Elsewhere, analysts anticipate that Saudi Arabia, the world’s largest oil supplier, will extend voluntary production cuts until October, keeping oil supplies limited.

Based on these expectations, sources surveyed by Reuters projected that Saudi Arabia’s official selling prices for all crude grades sold to Asia in October would rise to their highest levels this year.

Simultaneously, a military coup took place in Gabon on Wednesday, potentially affecting the country’s crude oil supplies and tightening the market. Ship-tracking data revealed that Gabon exported an average of 160,000 barrels per day to Asia from May to July.

However, concerns over fuel demand and the mixed economic situation in China, the world’s largest oil importer, are constraining oil gains.

Rising Oil Prices Due to U.S. Inventory

Rising Oil Prices Due to U.S. Inventory

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