Oil markets were happy to hear that summer isn’t over just yet, as the US government reported another decline in crude and gasoline stockpiles.
Futures in New York gained 1.2 percent after the Energy Information Administration said America’s crude inventories shrank for an eighth straight week, with gasoline supplies also falling. Price gains have been largely undercut by production increases in past weeks.
“As we exit summer driving season, peak demand season, it’s good to continue to see draws,” said Nick Holmes, an analyst at Tortoise Capital Advisors LLC in Leawood, Kansas, which manages $16 billion in energy-related assets. “That will help support prices as we move into refinery maintenance season.”
Investors have been watching US stockpile numbers closely as the Organization of Petroleum Exporting Countries and its allies take longer than expected to drain a global glut. The efforts have been hindered by rising output from shale fields and countries like Libya, which is exempt from OPEC-led cuts.
While the change in gasoline and crude inventories was largely in line with expectations, “you’re still seeing continued reductions in the inventory balance over time and the market is responding to that,” Adam Wise, who runs a $8 billion oil and natural gas bond and private-equity portfolio at John Hancock Financial Services Inc. in Boston, said by telephone.
West Texas Intermediate for October delivery rose 58 cents to settle at $48.41 a barrel on the New York Mercantile Exchange. Total volume traded was about 11 percent below the 100-day average.
Brent for October settlement added 70 cents to end the session at $52.57 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $4.16 to WTI, the widest since 2015.
The Bloomberg Dollar Spot Index fell as much as 0.3 percent. A weaker greenback boosts the appeal of commodities as an investment.
EIA Report
US crude stockpiles fell 3.33 million barrels to 463.2 million last week, the lowest level since January 2016, the EIA data showed. Gasoline inventories declined 1.22 million barrels to 229.9 million.
But the question for many investors is whether stockpiles will continue to decline next month, when refineries typically start going into maintenance as gasoline demand tends to drop after the US Labor Day weekend. Rising output from shale fields isn’t making things any easier. US crude output climbed by 26,000 barrels a day to 9.53 million last week, the highest since July 2015.
“The report was pretty bullish for crude,” Tamar Essner, an energy analyst at Nasdaq Inc. in New York, said by telephone. However, the data “reinforces this theory that even amid this downturn, crude production in the U.S. is ticking higher or stable. It’s not going lower.”
Oil-market news:
Harvey, which could strengthen into the first hurricane to strike Texas since 2008 this week, has forced workers to be evacuated from Gulf of Mexico platforms and sent cotton rallying. Global oil markets are in a fragile equilibrium, Dallas Fed President Rob Kaplan said at a Permian Basin Petroleum Association luncheon in Midland, Texas.
