U.S. crude oil and fuel stockpiles dropped sharply last week, as refiners in the U.S. Gulf region and oil facilities offshore were still recovering from Hurricane Ida’s hit late August, the Energy Information Administration said on Wednesday.
Crude inventories fell by 6.4 million barrels in the week to Sept. 10 to 417.4 million barrels, compared with expectations in a Reuters poll for a 3.5 million-barrel drop.
Refining activity picked up from the previous week, but the overall increase was modest as various facilities were still in the process of restarting. The drop in offshore output stemmed crude production, which rose modestly to 10.1 million barrels per day.
“For another week, stymied production and subdued refinery runs have offset each other, with both barely ticking higher in the last week as the U.S. Gulf Coast struggles to recover from the impact of Hurricane Ida,” said Matthew Smith, head of commodity research at ClipperData.
Even with the interruptions, crude stocks overall hit their lowest levels since September 2019. Ongoing demand strength has helped draw down crude stocks, and boosted the price of oil.
Refinery crude runs rose by 85,000 bpd last week, the EIA said. Refinery utilization rates rose by 0.2 percentage points to 82.1 per cent of overall capacity, even as Gulf Coast refining use slipped again. The region spent part of this week hunkering down as Hurricane Nicholas landed in Texas on Monday.
“The tropical storm that just came through slowed down recovery efforts from Hurricane Ida and we will continue to see the effects from Ida for the next few reports,” said Tony Headrick, energy market analyst at CHS Hedging.
U.S. gasoline stocks fell by 1.9 million barrels in the week to 218.1 million barrels, their lowest since November 2019. Stocks on the U.S. East Coast fell to their lowest since November 2017. Distillate stockpiles, which include diesel and heating oil, fell by 1.7 million barrels in the week to 131.9 million barrels, versus expectations for a 1.6 million-barrel drop.
Crude futures rallied after the data, with U.S. crude rising $2.50, or 3.5 per cent, to $72.91 a barrel as of 10:55 a.m. ET (1455 GMT). Brent rose 3.2 per cent to $75.92 a barrel.
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