© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, U.S., March 24, 2016. REUTERS/Nick Oxford
By Sonali Paul and Florence Tan
MELBOURNE/SINGAPORE (Reuters) -Oil prices recovered on Wednesday, after a U.S. industry report showed crude inventories fell more than expected last week, steadying after overnight losses from the impact of Hurricane Ida on U.S. refineries.
Prices rose ahead of the OPEC+ meeting at 1500 GMT where the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies are expected to stick to a plan to add 400,000 barrels per day (bpd) each month through December.
futures for November gained 49 cents, or 0.7%, to touch $72.12 a barrel by 0414 GMT while U.S. West Texas Intermediate (WTI) crude futures for October was at $69.00 a barrel, up 50 cents, or 0.7%.
Tuesday’s report from the American Petroleum Institute (API) that showed a bigger-than-expected drop in inventories was bullish and is supporting prices, Avtar Sandu, a senior commodities trader at Phillips Futures said.
U.S. crude stocks fell by 4 million barrels for the week ended Aug. 27, according to two market sources, citing API figures on Tuesday.
Ahead of the weekly Energy Information Administration report due at 10:30 a.m. EDT (1430 GMT) on Wednesday, a Reuters poll of analysts estimated crude stocks would drop 3.1 million barrels. [EIA/S]
However, U.S. crude prices are expected to remain under pressure as offshore oil and gas production in the Gulf of Mexico is gradually recovering, but refinery operations will likely take longer to return to normal, analysts said.
A total of 2.3 million bpd of refining capacity, or 13% of U.S. capacity, was shut in Louisiana due to Hurricane Ida, the U.S. Department of Energy estimated. At the same time, about 94% of oil and production remained suspended in the U.S. side of the Gulf of Mexico.
Power outages are likely to slow reopening of the processing plants, but Exxon Mobil (NYSE:)’s 520,000 bpd Baton Rouge complex was preparing to restart on Tuesday.
“We see a risk that the loss of U.S. refinery demand will be greater and more prolonged than the loss of crude supply,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, said in a note, adding that it could weigh on WTI prices through September.
Despite an expected swift return of U.S. crude production, OPEC+ expects the market to be in deficit at least until the end of 2021, OPEC+ sources said.
“This should provide comfort to the group that they can proceed with their planned monthly 400,000 bpd increase in production,” ANZ Research analysts said in a note.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
