NEW YORK: Crude stocks in the US plummeted to their lowest levels in three years due to refinery activity recovering from recent storms, and as a result, oil prices increased $1.
Demand for petroleum has risen to pre-pandemic levels, according to latest US economic estimates. Good product supply in the last four weeks came in at over 21 million barrels per day, roughly equal to what we had at our peak in 2019.
The U.S. Energy Information Administration said that US oil stocks decreased by 3.5 million barrels to 414 million barrels last week, the lowest total since October 2018.
“Crude oil prices are supported due to strong demand growth and increasing supply. Inventories remain high, however,” explains Lipow Oil Associates’ Andrew Lipow.
A rise of $1.40 or 2% took place for the U.S. West Texas Intermediate (WTI) oil futures around 11:50 a.m. EDT (1550 GMT),
Brent crude prices increased $1.46 (2%) to $75.82 per barrel.
The volume of oil pumped out of the Gulf of Mexico increased to almost 10 million barrels per day in the most recent week, according to the EIA. Hurricane Ida on Wednesday restored all four of BP’s offshore facilities in the region, and all four are operational again as of September 12.
In addition, members of the Organization of the Petroleum Exporting Countries have had difficulty in increasing output. Although increasing natural gas costs outside of the US have supported oil, energy constraints in Europe and Asia have caused a supply bottleneck, increasing the price of oil.
With rising natural gas prices, longer-term declines in prices are likely, according to analyst Jeffrey Halley of brokerage OANDA.
An increase in the U.S. Federal Reserve’s interest rate could make it harder for investors to accept risky assets, such as oil.