NEW YORK – Oil prices jumped on Thursday (Sep 8) on data showing a massive drop in US crude stockpiles due largely to the curtailment of imports because of a hurricane.
US benchmark West Texas Intermediate for October delivery rose US$2.12 to US$47.62 a barrel. In London, Brent North Sea oil for November delivery gained US$2.01 to US$49.99 a barrel.
The rally came after US Department of Energy data showed a 14.5 million barrel drop in US commercial inventories for the week ending Sep 2, the biggest weekly slump in US crude stockpiles for 17 years.
A “humongous draw to oil inventories has wrong-footed the market,” said Matt Smith of ClipperData.
Smith attributed the big decline to the suspension of imports and shutdown of some production due to Hurricane Hermine, which passed through the Gulf of Mexico in late August before crossing Florida and heading up the east coast.
James Williams of WTRG Economics cautioned that next week’s US inventory data could see a big inventory rebound. “What we’re gonna see next week is a really big increase in crude inventories,” Williams predicted.
Even after last week, US inventories stand at historically high levels for this time of year. The market is eyeing an Algeria meeting of major producers at the end of the month that could result in an agreement to limit output.