Oil prices rise on U.S. stock decline, recovery optimism
Crude oil futures extended gains on Wednesday amid a larger-than-expected drop in U.S. crude inventories and a stronger U.S. and Chinese factory activity. The news boosted optimism in fuel demand recovery and lifted risk appetite in the market.
Brent crude futures climbed 45 cents to $46.03 per barrel. U.S. West Texas Intermediate futures were up 43 cents to $43.19 per barrel.
U.S. crude stocks fell by 6.4 million barrels to 501.2 million barrels in the week ended Aug. 28, significantly bigger than analysts’ expectations for a 1.9 million-barrel drawdown. Gasoline stocks slid by 5.8 million barrels against analysts’ expectations for a 3.0 million-barrel drop.
U.S. manufacturing activity rose to a more than 1-year high in August. Chinese factory activity also surged at the fastest rate in almost a decade.
U.S. Gulf of Mexico offshore oil output fell by 525,099 bpd, which accounts for 28.4% of the region’s daily output. Energy companies are in the process of restarting production after Hurricane Laura hit the region. Still, 71 out of 643 platforms in the U.S. Gulf remain evacuated.
OPEC member United Arab Emirates’ oil production in August rose to 2.693 million bpd, surpassing its quota recommended by the organization’s panel. OPEC+ tapered output cuts from 9.7 million bpd to 7.7 million bpd from August to December. Producers are still in the process of compensating for overproduction in recent months, including the U.A.E.