Picture: REUTERS
Picture: REUTERS

London — Oil prices rose about 2% on Wednesday after industry data showed US inventories fell more than expected, while major US producers evacuated rigs in the Gulf of Mexico ahead of a storm.

US West Texas Intermediate (WTI) crude futures climbed $1.13 to $58.96 by 9.47am GMT, after hitting a session high of $59.18. Brent crude futures were up $1.14 at $65.30, down from a session high of $65.47.

Data from the American Petroleum Institute (API) on Tuesday showed US crude inventories fell by 8.1-million barrels in the week to July 5 to 461.4-million, compared with analyst expectations for a decrease of 3.1-million barrels.

Official figures from the US government’s Energy Information Administration (EIA) are due later on Wednesday.

“Prices are finely balanced right now as investors await fresh stimulus,” said Fawad Razaqzada, technical analyst at Forex.com. “The stimulus could come in the form of a sharp change in US crude oil inventories.”

Meanwhile big oil companies began evacuating and shutting in production in the Gulf of Mexico after weather forecasts warned that a tropical disturbance might become a storm later on Wednesday or Thursday.

Chevron, Royal Dutch Shell, BP and BHP Group are removing staff from 15 offshore energy platforms. ExxonMobil said it was “closely monitoring” the disturbance to determine if its facilities might be affected.

The Gulf of Mexico is home to 17% of US crude oil output which stands at about 12-million barrels per day (bpd).

“Assuming that [the storm] will cause some evacuations, then you would expect it to have a limited short-term impact but perhaps it’s a bit too early to say” said Paul Horsnell, head of commodities research at Standard Chartered.

The US and global benchmarks have gained this year as oil cartel Opec and big producers such as Russia have curbed output to bolster prices.

The alliance, known as Opec+, agreed last week to extend their supply-cutting deal until March 2020. Tensions around Iran’s nuclear programme and recent incidents involving oil tankers have also supported prices.

Iran’s President Hassan Rouhani said on Wednesday that Britain would face “consequences” over the seizure of an Iranian oil tanker near the coast of Gibraltar last week.

Oil prices have been under pressure from uncertainty over the outlook for global economic growth because of fallout from the US-China trade war as well as record oil supply growth.

On Tuesday, the EIA revised its US crude oil production forecast for 2019 to an all-time high of 12.36-million bpd.

Reuters