Oil Rises as American Refiners, Exporters Erode Stockpiles
Futures in London were little changed near $79 a barrel after a 1.3 percent gain Tuesday.
(Bloomberg) -- Oil jumped after U.S. refiners and exporters eroded domestic stockpiles, sending them to a fresh three-year low.
Futures settled 1.8 percent higher on Wednesday in New York. At a time of year when American refiners typically shut equipment for maintenance work, processing rates last week remained more than 10 percentage points above year-earlier levels, the Energy Information Administration said. Meanwhile, overseas demand for U.S. oil expanded for a second week while impending sanctions curbed orders for Iranian crude.
“We’re near the top of the bull market,” said Michael Lynch, president of Strategic Energy & Economic Research. “That relatively strong inventory report has made people worry more about oil supply this fall and winter.”
Underpinning higher oil prices is the specter of far-reaching U.S. sanctions intended to isolate the Iranian regime. Crude prices will trade above $80 a barrel during the fourth quarter amid strong global demand growth and declining Iranian exports, according to HSH Nordbank AG.
West Texas Intermediate crude for October delivery rose $1.27 to close at $71.12 on the New York Mercantile Exchange.
Brent for November settlement added 37 cents to close at $79.40 on the ICE Futures Europe exchange. The contract traded at a $8.63 premium to WTI for the same month after rising above $10 earlier this month.
American crude inventories declined by 2.06 million barrels last week, the EIA said. The withdrawal came in 18 percent below the 2.5-million median estimate of analysts in a Bloomberg survey.
The EIA also reported that U.S. crude exports rose to 2.37 million barrels a day, the highest since July. WTI’s deep discount to Brent has enticed buyers to purchase the American grade. Meanwhile, supplies at the key storage hub in Cushing, Oklahoma, and nationwide gasoline stockpiles also declined.
Other oil-market news:
- Gasoline futures rose 0.8 percent to $2.0207 a gallon.
- BP Plc is replacing its head of U.S. oil trading with a senior trading executive from Singapore, as it shuffles senior personnel in the division.
--With assistance from Tsuyoshi Inajima and Jessica Summers.
To contact the reporter on this story: Samuel Robinson in New York at srobinson145@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, Carlos Caminada
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