Decrease in US stockpiles lifts oil
Brent rises as solid US and Chinese factory activity fuels optimism of a recovery from the pandemic, boosting investor risk appetite
Tokyo — Crude oil futures extended gains on Wednesday after a bigger-than-expected draw in US crude stockpiles and as solid US and Chinese factory activity fuelled optimism of a recovery from the pandemic, boosting investor risk appetite.
Brent crude futures rose 37c to $45.95 a barrel as of 3.10am GMT, extending gains into a third day.
US West Texas Intermediate futures rose 34 cents to $43.10, following the previous day's gain by 15c.
US crude inventories fell by 6.4-million barrels in the week to August 28 to about 501.2-million barrels, the American Petroleum Institute (API) said, against analysts’ expectations for a draw of 1.9-million barrels.
Petrol stocks also fell by 5.8-million barrels, more than analysts’ estimates of a draw of 3-million barrels.
Analysts had forecast a sixth weekly drawdown in US crude inventories in a Reuters poll.
“A bigger-than-expected draw in the US stockpiles and growing hope for an economic recovery in the US and China after healthy factory data prompted buys in oil futures,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
US manufacturing activity accelerated to a more than one-and-a-half-year high in August amid a surge in new orders, lending support to Wall Street and oil markets.
China’s factory activity also expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders in 2020 as manufacturers ramped up production to meet rebounding demand, a private survey showed on Tuesday.
“Also, slower-than-expected resumption of oil output in the US after Hurricane Laura raised concerns over tighter supply,” said Kazuhiko Saito, chief analyst at Fujitomi.
US Gulf of Mexico offshore oil output on Tuesday was down by 525,099 barrels a day (bbl/day), or 28.4% of the region’s daily production, the US department of interior reported, as energy companies restarted more activity in the aftermath of Hurricane Laura.
Still, 71 of the US Gulf of Mexico’s 643 manned platforms remained evacuated, down from 117 production platforms on Monday, the regulator said.
On the global supply side, oil output by Opec rose by about 1-million barrels a day in August, a Reuters survey found.
From May 1, Opec and allies, known as Opec-plus, made a record cut of 9.7-million barrels a day, or 10% of global output, after the novel coronavirus destroyed a third of world demand. From August 1, the cut tapered to 7.7-million barrels a day until December.
The United Arab Emirates (UAE) pumped 2.693-million barrels a day in August, above its Opec-plus quota, after hot weather and people holidaying at home drove associated gas demand for power generation, two sources familiar with the matter told Reuters.
“Higher output by the UAE capped gains in oil prices,” Nissan Securities’ Kikukawa said.
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