Oil prices rose more than 1% on Wednesday. Overnight gains widened after industry data showed U.S. crude inventories fell more-than-expected after two hurricanes last week, with supply tightening as demand improved.
West Texas Intermediate (WTI) crude futures were up 89 cents, or 1.3%, to $71.38 a barrel at 0516 GMT, up 35 cents from Tuesday.
Brent crude futures rose 88 cents, or 1.2%, to $75.24 a barrel after gaining 44 cents on Tuesday.
On Monday, oil market focus turned to tight supply issues after doubts over the solvency of Chinese real estate firm Evergrande raised concerns in equity markets over its possible default and broad market fluctuation.
Chinese real estate giant Evergrande is facing a major bottleneck. It is stated that there will be a chain crisis in the real estate market, with the company going into default if its debt of more than 300 billion dollars is not paid on time.
Prices are still gaping ahead of the EIA weekly report, which will be released today, and ahead of the US Federal Reserve’s monetary policy decision. In the near term, crude could be bustling in larger markets such as Chinese or markets focused on Fed policy.
Citing Tuesday’s figures from the American Petroleum Institute, market sources said US crude inventories fell 6.1 million barrels in the week ended Sept. That’s a much bigger drop than the 2.4 million-barrel drop in crude oil inventories that most analysts had expected on average.
The market will watch data from the U.S. Energy Information Administration on Wednesday to confirm massive declines in crude oil and fuel stockpiles.
Given the diversity of supporting factors in the energy space, particularly high natural gas prices that have made oil more attractive as a substitute, and strong physical demand, current price declines are likely to be short-lived.
Global gas prices are expected to hit records this winter as the hot northern hemisphere summer keeps stocks low in key markets.
Supply is expected to remain tight after Royal Dutch Shell, the US’s largest producer in the Gulf of Mexico, said damage to its offshore transfer facilities would cut production till early next year.
Some producers in the Organization of the Petroleum Exporting Countries and their allies are struggling to increase production to targeted levels. Most of the shortfall is sourced by Nigeria, Angola and Kazakhstan.
