US crude oil stockpiles rose sharply last week and gasoline inventories fell the most on record as refineries continued to be hampered by damage from Hurricane Harvey, the Energy Information Administration said on Wednesday.
West Texas Intermediate for October delivery rose 72 cents to $48.95/bbl at 12:14 p.m. on the New York Mercantile Exchange. "WTI has been lagging [Brent] of late due to the bearish impact of Hurricane Harvey on refining activity", but played catch up Wednesday.
Crude inventories rose 5.9 million barrels, compared with analysts' expectations for an increase of 3.2 million barrels.
The IEA also said the impact from Hurricane Harvey on USA oil markets in the Gulf Coast was easing and its impact on global markets was likely to be relatively short-lived, although it would possibly help inventories rebalance more quickly.
But the EIA also reported that total domestic US crude output jumped by 572,000 barrels a day to 9.353 million barrels. The post-storm recovery will likely bring oil demand to a higher level, gradually offsetting the negative impact, Goldman Sachs said.
At its peak, Hurricane Harvey knocked out more than 10,000 MW of electricity generating capacity in the Texas grid, while relatively cool temperatures across most of the state also reduced natural gas demand.
"Refinery runs dropped by almost 400,000 [barrels a day] to a 4 1/2 -year low, meaning lower crude demand translated into higher crude flows into storage tanks", said Smith.
Stocks of distillates also declined by a more-than-expected 3.2 million barrels. That was larger than the S&P Global Platts survey expectations for a 4 million-barrel fall.
Analysts say U.S. stocks data may not give a full picture in coming weeks because of two major hurricanes - Harvey and Irma. Gulf Coast gasoline prices rose by 35 cents per gallon to $2.51/gal, Texas state average prices rose 40 cents per gallon to $2.56/gal, and Houston prices rose by 35 cents per gallon to $2.43/gal from August 28 to September 4.
The IEA sees global oil demand rising this year by the most since 2015, while OPEC boosted projections for consumption in Europe and China.
"Outright benchmark crude prices gained in August, reflecting higher demand in the northern hemisphere and tight physical markets for oil products", the IEA said.
Oil prices climbed on Wednesday, as the International Energy Agency (IEA) reported a surplus of crude supply was starting to decline.
Al-Falih agreed in separate talks with the ministers in the Kazakh capital Astana that steps taken by OPEC and other major crude producers such as Kazakhstan have contributed to better market stability, according to three emailed statements from the Saudi energy ministry.