Oil prices rose on Wednesday, bouncing back from previous losses, driven by a decrease in U.S. crude inventories and concerns over potential disruptions to U.S. output due to Hurricane Francine. Brent crude futures increased by $1.07 to $70.26 a barrel, while U.S. crude futures saw a $1.20 gain to reach $66.95. The American Petroleum Institute reported a 2.793 million barrel drop in U.S. crude stocks, along with declines in gasoline and distillates inventories, providing some relief for the market.
The API data showed a significant decline in crude oil stocks, surpassing expectations for gasoline draws, and a slight build in distillate inventories. This positive report contrasted with the previous day’s market decline, with both Brent and U.S. crude prices dropping to their lowest levels in months after OPEC revised down its 2024 oil demand growth forecast. However, concerns about Hurricane Francine disrupting U.S. output, combined with the API data, led to renewed market support.
Analysts noted that about 24% of crude production and 26% of natural gas output in the U.S. Gulf of Mexico were offline due to the storm, according to the U.S. Bureau of Safety and Environmental Enforcement. This factor, along with the API report and ongoing supply disruption fears, contributed to the rebound in oil prices. Official U.S. government inventory figures were expected later in the day, providing further insights into the market’s direction.
Market expectations from eleven analysts suggested a potential rise in crude inventories by around 1 million barrels, along with a slight decrease in gasoline stocks. Overall, the combination of the API report, concerns over Hurricane Francine, and ongoing supply disruptions in the U.S. Gulf of Mexico influenced the positive movement in oil prices on Wednesday. Increased demand, geopolitical factors, and global economic conditions continue to play a significant role in the volatility of oil markets.
