Oil Futures Rise on Draw to U.S. Crude Inventories
Oil futures see a boost as U.S. crude inventories decline, influenced by Hurricane Idalia and political unrest in Gabon. Analysts predict further decrease in inventories.
Oil futures saw an early morning boost on Wednesday following industry data that revealed a significant decrease in U.S. crude inventories. This upward trend was further influenced by the ongoing situation in Hurricane Idalia and Gabon, one of Africa's key oil producers and a member of OPEC, currently experiencing a coup.
The West Texas Intermediate (WTI) crude for October delivery climbed by 56 cents, or 0.7%, reaching $81.72 a barrel on the New York Mercantile Exchange. This push in price is providing traders with optimism regarding future market performance.
October Brent crude, the global benchmark, also experienced growth with a 0.5% increase, equivalent to 49 cents, hitting $85.98 a barrel on ICE Futures Europe. The most actively traded contract, November Brent, rose by 50 cents, or 0.6%, amounting to $85.41 a barrel.
According to market sources citing data from the American Petroleum Institute (API), U.S. crude inventories declined by a substantial 11.5 million barrels last week. At the same time, gasoline inventories observed a slight rise of 1.4 million barrels, while distillates recorded an increase of 2.5 million barrels.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, highlighted the significance of this decline in oil inventories, stating that if confirmed, it would result in the lowest private oil stocks in a year.
These positive developments strongly indicate a potential increase in oil prices in the near future.
The Energy Information Administration (EIA) is set to release its official inventory figures on Wednesday morning. According to analysts surveyed by S&P Global Commodity Insights, a decline of 5.2 million barrels is expected in crude inventories. This drop is attributed to strong refinery demand and increased exports.
Analysts also anticipate a fall of 600,000 barrels in gasoline inventories, bringing the total to around 217 million barrels. Additionally, distillate stocks are predicted to be 1.4 million barrels lower, reaching approximately 115.3 million barrels.
Despite mutinous soldiers claiming to overturn the results of a presidential election in Gabon, analysts have reported no signs of disruption to oil production in the country. Western oil companies such as TotalEnergies and Maurel & Prom have operations in Gabon.
Hurricane Idalia has intensified into a Category 4 storm, and it is expected to make landfall on Florida's west coast. Oil producer Chevron Corp. has already taken precautions ahead of the storm. According to news reports, non-essential personnel have been evacuated from two Gulf of Mexico oil platforms, while all staff from a third platform has been removed.
Chevron's Blind Faith and Petronious platforms have had their nonessential personnel evacuated, while its Genesis platform, which is currently being decommissioned, had all of its staff removed. Despite these precautionary measures, production at Chevron-operated oil and gas facilities in the Gulf continues uninterrupted, as reported by Reuters.