By Adedapo Adesanya
Brent crude jumped more than 2 per cent or $1.50 to $75.86 per barrel after crude inventories in the United States fell to their lowest levels in three years as refining activity recovered from recent storms.
This development pushed the US West Texas Intermediate (WTI) higher by 2.01 per cent or $1.42 to trade at $71.91 per barrel.
The Energy Information Administration (EIA) reported yet another inventory draw of 3.5 million barrels for the week to September 17 compared with a hefty draw of 6.4 million barrels for the previous week and an estimated 6.1 million barrels inventory decline for the week to September 17, as reported by the American Petroleum Institute (API).
The latest inventory movements happened due to the damage Gulf Coast refineries suffered from Hurricane Ida, meaning they do not necessarily reflect any major changes in demand. However, they moved prices due to the size of the inventory change.
This month has witnessed a strong performance for the black gold after extreme weather disrupted US supplies and as a rally in natural gas spurred expectations oil demand may benefit from switching.
Rising prices in other markets like natural gas have also supported oil, with energy market shortages causing a supply crisis in Europe and Asia.
The oil market will continue to monitor development as facilities in the Gulf of Mexico continue to return to production, with weekly output rising 500,000 barrels per day in the most recent week to 10.6 million barrels per day, the EIA said.
Shell BP on Wednesday said all four of its offshore facilities in the region have resumed operations after Hurricane Ida, brought back online and producing as of September 12.
Also supporting prices were difficulties experienced by OPEC members like Nigeria, Angola, and Kazhastan struggling to raise output.
In Asia, China’s central bank injected more short-term cash into the financial system, alleviating some concern over the crisis at China Evergrande Group and cooling-off worries for investors.
The US Federal Reserve, which began a two-day policy meeting on Tuesday, is expected to start tightening monetary policy and the market will be on the lookout for the latest interest rate decision which could cut investor tolerance for riskier assets such as oil.
