Oil prices rose about 1% on Wednesday, extending overnight gains, after industry data showed US crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves.
Further supporting the market, some producers in oil cartel OPEC and their allies, together called OPEC+, are struggling to increase output up to their targeted levels, sources told Reuters. Most of the shortfall is from Nigeria, Angola and Kazakhstan.
US West Texas Intermediate (WTI) crude futures rose 75c, or 1.1%, to $71.24 a barrel at 1.31am GMT, adding to a 35c gain from Tuesday.
Brent crude futures climbed 68c, or 0.9%, to $75.48 a barrel, after gaining 44c on Tuesday.
After coming under pressure on Monday on broader market jitters over the possible default of Chinese property developer China Evergrande Group, the oil market’s focus turned to tight supply issues.
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US crude stocks fell by 6.1-million barrels for the week ended September 17, market sources said, citing figures from the American Petroleum Institute on Tuesday.
That was a much bigger decline than the 2.4-million barrel drop in crude inventories which 10 analysts polled by Reuters had expected on average.
The market will be watching out for data from the US. Energy Information Administration on Wednesday to confirm the big drops in crude and fuel stocks.
Supply is expected to remain tight after Royal Dutch Shell , the largest US Gulf of Mexico producer, said damage to its offshore transfer facilities would cut production into early next year.
Petrol inventories fell by 432,000 barrels and distillate stocks, which include jet fuel, fell by 2.7-million barrels, the API data showed, according to the sources, who spoke on condition of anonymity.
That comes at a time when jet fuel demand is picking up.
“Market sentiment got additional support from the end of the US ban on foreign travellers,” ANZ commodity analysts said in a note.
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