Oil Jumps as Industry Report Shows Biggest Crude Draw Since July
(Bloomberg) -- Oil popped higher after an industry report showed the biggest drop in U.S. crude stockpiles since July.
Futures in New York advanced beyond the session’s 2.5 percent jump after the American Petroleum Institute was said to report an 8.64 million-barrel drop in domestic inventories last week. Supplies also declined at the important storage complex in Cushing, Oklahoma, the API was said to disclose, a strong signal of tightening markets.
“When you’ve got that large of a draw, that makes you a little bit nervous,” said James Williams, president of London, Arkansas-based energy researcher WTRG Economics.
Earlier in the session, crude advanced as U.S. sanctions crippled Iranian exports and Hurricane Florence threatened East Coast gasoline supplies. Motorists in the path of Florence may see “dramatic” spikes in gasoline prices, according to AAA, as mass evacuations drain retail filling stations.
London-traded Brent, which is more sensitive to global supply disruptions, widened to the largest premium to the U.S. benchmark crude in almost three months. France and South Korea are shunning Iranian crude, forcing the Islamic Republic to effectively remove some oil from global markets.
“Brent’s really the lead horse,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. “Geopolitical threats and production disruptions tend to impact European sweet crudes more than U.S. crudes.”
As Florence moves closer to the southeastern coast of the U.S., the storm appears likely to strengthen, forecasters said. The hurricane is poised to be the strongest to slam North Carolina in 64 years, according to the U.S. Hurricane Center.
Gasoline futures jumped 5.5 cents to settle at $2.0142 a gallon on the New York Mercantile Exchange.
West Texas Intermediate for October delivery traded at $69.88 a barrel at 4:48 p.m. after ending the session at $69.25 a barrel on the Nymex, the highest close in a week.
See Also: Permian constraints push U.S. to cut oil output estimates
Brent for November settlement advanced $1.69 to settle at $79.06 on the ICE Futures Europe exchange. The global benchmark crude’s premium to WTI for the same month was at $10.02.
The API report also showed distillate supplies rose by 5.82 million barrels last week, while gasoline stockpiles jumped 2.12 million barrels.
The Energy Information Administration is scheduled to disclose its weekly tally on Wednesday.
Some other key oil-market figures, news and events:
- OPEC and its allies are in constant contact on production, Russian Energy Minister Alexander Novak said.
- Oil producers are signaling their concern that Permian Basin pipelines won’t be ready on time next year with a fivefold jump in hedging designed to protect against bottlenecks in America’s biggest shale field.
- Aramco was said to be ready to supply full contractual crude volumes to at least three buyers in Asia for October.
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