The Engen oil refinery in Durban. File photo: REUTERS/ROGAN WARD
The Engen oil refinery in Durban. File photo: REUTERS/ROGAN WARD

London — Oil prices rose on Wednesday after industry data showed a larger-than-expected drawdown in US crude inventories and on expectations that demand will rise as more people get vaccinated against Covid-19.

Brent oil rose 60c, or 0.8%, to $74.20 a barrel by 8.58am GMT, while US West Texas Intermediate crude climbed 65c, or 0.9%, to $71.11.

US crude oil, petrol and distillate stocks fell last week, two market sources said, citing American Petroleum Institute figures, after Hurricane Ida shut numerous refineries and offshore drilling production.

Crude stocks fell by 5.4-million barrels for the week ending September 10, compared with a forecast drop of 3.5-million barrels.

The US Energy Information Administration’s oil inventory report is due at 2.30pm GMT on Wednesday.

“The impact of Hurricane Ida was a lot greater than many anticipated and production in the Gulf of Mexico region might struggle to return until Tropical Storm Nicholas is done punishing the region with torrential rain,” said Edward Moya, senior analyst at Oanda.

Tropical Storm Nicholas moved slowly through the Gulf Coast on Tuesday, leaving hundreds of thousands of homes and businesses without power, though Texas refineries were operating normally.

Damage from the storm comes two weeks after Hurricane Ida knocked a significant amount of Gulf Coast refining capacity offline.

Oil prices also found support from the International Energy Agency (IEA), which said on Tuesday that vaccine rollouts would power a rebound, after a three-month slide in global oil demand due to the spread of the Delta coronavirus variant and renewed pandemic restrictions.

But oil price gains were capped by a fall in China’s crude throughput in August with daily refinery runs hitting the lowest since May 2020 and overall factory output faltering.

Reuters

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