Oil prices jumped more than 4% on Wednesday, following a drawdown in U.S. crude and gasoline inventories and as Hurricane Sally forced a swath of U.S. offshore production to shut.
U.S. crude stocks fell 4.4 million barrels last week to 496 million barrels, their lowest since April, the U.S. Energy Information Administration said.
U.S. gasoline stocks fell 400,000 barrels, the EIA said, more than double the draw forecast, while refining utilization rates ticked up 4 percentage points.
The strong gains were largely attributable to bullish crude guidance out of the EIA release and the bulk of the (crude) stock decline was driven by an unexpectedly large upswing in U.S. refinery activity led by the Gulf Coast.
Sally, which made landfall on the U.S. Gulf Coast as a Category 2 hurricane, also boosted oil prices as more than a quarter of offshore output shut due to the storm. Roughly 500,000 barrels per day (bpd) of offshore crude oil production was taken offline in the U.S. Gulf of Mexico, according to the U.S. Interior Department, roughly a third of the shut-ins caused by Hurricane Laura, which landed farther west in August.
Oil collapsed to historic lows as the coronavirus crisis hit demand. A record supply cut by OPEC and its allies, a grouping known as OPEC+, and an easing of lockdowns have helped Brent recover from a 21-year low below $16 in April.
Prices have sunk in September, pressured by rising coronavirus cases and concerns about demand.
The Organization of the Petroleum Exporting Countries and International Energy Agency both cut their demand outlooks this week.
A panel of OPEC+ oil ministers meets to review the supply pact on Thursday and is unlikely to recommend further output curbs despite the price drop, sources told Reuters.
A glut of Nigerian crude oil cargoes continued to look for buyers while Angolan crude sold steadily on reduced prices, as export volumes for November-loading oil from the country were still awaited on Wednesday afternoon.
* State oil company Sonangol had sold all of its spot cargoes by early this week on sharp decreases to price offerings amid slow Chinese buying.
* Around eight cargoes of October-loading Angolan crude remained, as traders said sellers lagged behind Sonangol in perceiving the weak East Asian demand and promptly lowering prices.
* Offers of light Nigerian crude still bobbed above dated Brent flat but traders said they would likely sell for far less.
* A flip of the Brent-Dubai spread to a discount for the first time since the height of the global pandemic could stoke renewed interest from Asian buyers in West African cargoes and provide an avenue for the Nigerian glut.
* Traders said cheap U.S. oil and poor margins were largely shutting Nigerian crude out of Europe, while sluggish demand in India which has seen virus cases flaring is also weighing.
The Prices are as follows:
(1)Dated Brent =$40.915 /bbl (1.795)
(2)Bonny Light =$40.705 /bbl (1.840)
(3)QuaIboe =$40.305 /bbl (1.84)
(4)Forcados =$40.805 /bbl (1.84)
Premium unleaded pms= $394.75 /mt (12.50)
0.1% Gasoil= $318.00/mt (6)
Clean Tanker freight UKC-WAF= $19.18/mt (0)
Stay Safe and have a wonderful week.