Oil rises as IEA sees demand boost; U.S. fuel stocks slump


NEW YORK (Reuters) – Oil prices rose on Wednesday after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink, even though U.S. data showed another big increase in crude inventories due to the ongoing effects of Hurricane Harvey.
U.S. gasoline and distillate stocks fell sharply as Harvey shut nearly a quarter of the nation’s capacity with major Gulf Coast refineries only starting to come back to life in the last few days.
Much of that was because of a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption.
Oil prices jumped after the report but then pared gains.
U.S. crude futures (CLc1) were up 53 cents, or 1.1 percent, to $48.75 per barrel and Brent crude (LCOc1) was up 32 cents to $54.59 a barrel, about where prices were prior to the data.
“A sharp rebound in U.S. oil production compared with last week has limited gains in crude prices as concerns grow that oil output is recovering faster than refining capacity coming online,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
U.S. crude production rebounded to an average of 9.35 million barrels per day from 8.78 million bpd a week earlier, entirely the result of increases in the lower 48 states.
U.S. gasoline futures (RBc1) dipped after the data, and were down modestly to $1.6546, however, which Andrew Lipow of Lipow Oil Associates in Houston said was a “counterintuitive” reaction.
It recommended that the U.S. strengthens its energy security to address events, such as hurricanes, by potentially adding oil products to government-held inventories.
Overall, the IEA said in its monthly report that robust global demand and an output drop from OPEC and other producers should help balance inventories.
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