Oil Rises After Industry Reports Surprise U.S. Crude Stock Draw
Oil declined on concerns that U.S. crude stockpiles are expanding at a rate not seen since early 2017.
(Bloomberg) -- Oil popped higher after an industry report showed an unexpected decline in U.S. crude inventories.
Futures rose from the settlement in New York on Tuesday after the industry-funded American Petroleum Institute was said to report U.S. crude inventories dipped 2.13 million barrels last week. That would be the first decline in four weeks if Energy Information Administration data confirms it on Wednesday. Hurricane Michael shut in production in the Gulf of Mexico during the reporting period, which may contribute to the inventory decline.
“Hurricane Michael is the deciding factor on why inventories didn’t continue to climb,” said Thomas Finlon, director of Energy Analytics Group Ltd. in Wellington, Florida. The loss of production “doesn’t all come back at once. It gradually comes back on.”
Oil markets were roiled in recent days as the mystery over the disappearance of prominent Saudi critic Jamal Khashoggi deepened, drawing tit-for-tat threats of punitive action by the U.S. and the Saudi regime. On Monday, media reports emerged that said the kingdom was considering saying Khashoggi perished in a botched interrogation inside the Saudi consulate in Istanbul.
West Texas Intermediate for November delivery traded at $72.21 a barrel at 4:43 p.m. in New York after ending the session at $71.92 on the New York Mercantile Exchange. Total volume traded Tuesday was about 11 percent below the 100-day average.
Brent for December settlement rose 63 cents to close at $81.41 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.65 premium to WTI for the same month.
The API was also said to report that inventories at the key pipeline hub in Cushing, Oklahoma, rose by 1.53 million barrels last week. Gasoline and distillate supplies both fell, according to the data. A Cushing increase would be the fourth consecutive one if EIA data confirms it.
Analysts in a Bloomberg survey are expecting Wednesday’s report to show a 2.5 million-barrel increase in crude stocks.
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--With assistance from Sharon Cho, Grant Smith and Samuel Robinson.
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