Investing.com -- U.S. oil stockpiles declined last week, confounding expectations, according to the Energy Information Administration.
Crude inventory fell by 4.4 million barrels last week after a 2 million-barrel increase the week before. Analysts tracked by Investing.com had expected a build of 1.27 million barrels for the week.
Hurricane Sally bore down on the U.S. Gulf Coast on Wednesday but was not expected to cause major damage to drilling and refinery operations, though a quarter of production in the region is shut down.
Oil stored at Cushing, Oklahoma, fell by 74,000 barrels after a build of 1.8 million barrels the prior week.
Oil prices jumped Wednesday morning after an industry estimate on Tuesday showed a surprising 9.5 million-barrel draw from inventory. West Texas Intermediate, the Crude Oil WTI Futures benchmark, rose 4%, to $39.83, and Brent Oil Futures, the international standard, rose 3.5%, to $41.98.
“While the crude draw itself is positive, given that it’s four times more than the build estimate, the ‘hidden’ number to me is last week’s production, which was up nearly a million barrels from output returning after Hurricane Laura.," said Investing.com analyst Barani Krishnan, referring to last month's storm. "We’re now at nearly 11 million bpd, just about 2 million shy of the March record high."
Krishnan added the current storm could cause additional outages and numbers could be distorted for another week or two. "I’d caution oil bulls as taking any of these numbers and running with them. For sure, with the end of the peak U.S. driving season and with work commute and flights still at a fraction of pre-pandemic levels, there is seriously no great story for fuel demand. The IEA has, accordingly cut its forecasts; OPEC+ has said it won’t do unilateral cuts to support prices and Libya could bring up to a million barrels more to the market if the peace process there holds.”