© Reuters. FILE PHOTO: A sticker says Crude Oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, the United States, Nov. 22, 2019. REUTERS / Angus Mordant
By Noah Browning
LONDON (Reuters) – Oil prices rose $ 1 on Wednesday after industry data showed a greater than expected drop in inventories and demand is expected to rise as vaccination rollouts expand.
US crude West Texas Intermediate (WTI) rose $ 1.12, or 1.6%, to $ 71.58 a barrel climbed.
US crude, gasoline and distillate inventories fell last week, citing figures from the American Petroleum Institute, two market sources said after Hurricane Ida shut down numerous refineries and offshore drilling production. (API / S)
Crude oil inventories declined 5.4 million barrels for the week ending September 10, compared to a projected decline of 3.5 million barrels.
The U.S. Oil Inventory Report Energy Information Administration is due on Wednesday at 10:30 am EDT (1430 GMT).
"The impact of Hurricane Ida was far greater than many expected and production in the Gulf of Mexico region would be difficult to return until Tropical Storm Nicholas punishes the region with torrential rains," said Edward Moya, senior analyst at OANDA.
Tropical Storm Nicholas slowly moved across the Gulf Coast on Tuesday, leaving hundreds of thousands of homes and businesses without power, even though refineries in Texas were operating normally.
The storm damage comes two weeks after Hurricane Ida shut down a significant portion of refining capacity on the Gulf Coast.
"This year's hurricane season has had a much larger and longer lasting impact on the global oil balance than in previous years," said Tamas Varga, oil analyst at the London brokerage PVM Oil Associates.
Oil prices also found support from the International Energy Agency (IEA), which on Tuesday said the introduction of vaccines would rebound after a three-month decline in global oil demand due to the spread of the delta coronavirus variant and renewed pandemic restrictions.
However, oil price gains were capped by a decline in Chinese crude oil throughput in August, with daily refining runs reaching their lowest level since May 2020 and overall production at the factories stalling.
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