Oil prices rise as US crude stocks jump, gasoline inventories drop
US crude stocks rose significantly last week on reduced refining activity following Hurricane Harvey. Reuters file photo by Nick Oxford.
Market appears to have factored in impact of Hurricanes Harvey and Irma
US crude stocks rose significantly last week and gasoline inventories dropped to the lowest level on record as US Gulf Coast refinery activity markedly slowed in the wake of Hurricane Harvey.
As of 1:16 p.m. EDT, US crude prices were up 78 cents to $49.01/barrel and benchmark Brent crude rose by 66 cents to $54.93/barrel.
According to US Energy Information Administration’s weekly data on crude inventories, oil stocks rose by 5.9 million barrels, much higher than the 3.2 million barrel increase anticipated by analysts.
Harvey’s destruction forced the closure of a number of refineries along the Texas coast as well as some production facilities and ports. According to Reuters, refineries operated at their lowest levels in nine years following Harvey, which slammed into the Gulf Coast on Aug. 25.
Slowly, crude production is returning online, with output increasing to 9.4 million barrels per day (b/d) in the week ending Sept. 8, up from 8.8 million b/d a week earlier.
“Impact of the 2017 Atlantic Hurricane season continues to be seen in today’s report with a build observed in the commercial crude stockpile and drawdowns in refined products,” Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics told Reuters. “The focus now shifts to the post-Harvey scenario,” he said.
“The market seems to be recognizing that this is a hurricane-altered report, and is waiting to see once we get through this hurricane period,” Gene McGillian, director of market research at Tradition Energy told Reuters.
EIA data shows refinery utilization rates were down by 2 per cent to 77.7 per cent, the lowest since 2008 on a drop of crude runs by 394,000 b/d.
Crude stocks at the US delivery hub located in Cushing, Oklahoma, were up by 1 million barrels and gasoline stocks fell 8.4 million barrels. The reduction in gasoline inventories is the largest draw on record and surpasses analysts expectations of a 2.1 million-barrel decline.
EIA data showed distillate stocks, including diesel and heating oil were down by 3.2 million barrels. Analysts had anticipated a drop of 1.5 million barrels.
US crude imports also fell last week, dropping by 1.2 million b/d to 5.7 million b/d, the lowest on record. US crude exports declined to 6.5 million b/d, the lowest since crude export restrictions were first relaxed in 2014.
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