Oil prices rose around 1% on Wednesday, extending overnight gains, after industry data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves.
U.S. West Texas Intermediate (WTI) crude futures rose 75 cents, or 1.1%, to $71.24 a barrel at 0131 GMT, adding to a 35 cent gain from Tuesday.
Brent crude futures climbed 68 cents, or 0.9%, to $75.04 a barrel, after gaining 44 cents on Tuesday.
After coming under pressure on Monday on broader market jitters over the possible default of Chinese property developer China Evergrande Group, the oil market’s focus turned to tight supply issues.
U.S. crude stocks fell by 6.1 million barrels for the week ended Sept. 17, market sources said, citing figures from the American Petroleum Institute on Tuesday.[API/S]
That was a much bigger decline than the 2.4 million barrel drop in crude inventories which 10 analysts polled by Reuters had expected on average.
The market will be watching out for data from the U.S. Energy Information Administration on Wednesday to confirm the big drops in crude and fuel stocks.
Supply is expected to remain tight after Royal Dutch Shell, the largest U.S. Gulf of Mexico producer, said damage to its offshore transfer facilities would cut production into early next year.
Gasoline inventories fell by 432,000 barrels and distillate stocks, which include jet fuel, fell by 2.7 million barrels, the API data showed, according to the sources, who spoke on condition of anonymity.
That comes at a time when jet fuel demand is picking up.
“Market sentiment got additional support from the end of the U.S. ban on foreign travellers,”.
Further supporting the market, some producers in the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+, are struggling to increase output up to their targeted levels, sources told Reuters. Most of the shortfall is from Nigeria, Angola and Kazakhstan.