Oil prices surged about 4 percent on Thursday after U.S. inventory data showed a surprisingly large drawdown in crude stocks as imports into the U.S. Gulf Coast slid last week due to Tropical Storm Hermine.
Continue Reading Below
U.S. crude stocks dropped 14.5 million barrels last week to 511.6 million barrels, the biggest weekly drop in stockpiles since January 1999, according to the U.S. Energy Information Administration. Analysts had expected a modest increase in inventories.
Brent crude oil neared $50 a barrel for the first time in two weeks. It rose $1.84 to $49.82 a barrel, a 3.8 percent gain, by 12:56 p.m. EDT (1656 GMT). U.S. crude was up $1.83, or 4 percent, to $47.33 per barrel.
Tropical Storm Hermine, which threatened the Gulf Coast refining region last week, scuttled some U.S. oil production and limited imports and shipping. Gulf Coast crude imports hit the lowest levels on record last week, data showed, even though the storm ultimately did not harm Gulf facilities.
"The drop in crude stocks was caused by the decline in imports after the storm delayed ships going into Louisiana and Texas," said James Williams, president of energy consultant WTRG Economics in Arkansas.
"Next week, crude stocks will likely rise dramatically as those ships offload this week," Williams added.
Key U.S. oil spreads remained little changed after the EIA report. Tariq Zahir, spreads trader at Tyche Capital in New York, said the "drawdown may be viewed as a one-off situation."
Gasoline futures jumped 5 percent after the data release, on higher than expected draws. Gasoline margins <1RBc1-CLc1> also rose sharply.1RBc1-CLc1>
Oil prices drew support earlier when Chinese trade data showed crude imports in August surged nearly 25 percent from a year ago to the second-highest ever, as independent refiners took advantage of low oil prices before import quotas expire in December.
On Monday, crude prices jumped after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Uncertainty remains over the chances that producer nations will agree on an output freeze. An April meeting in Doha, Qatar, failed to reach an agreement.
"Implementation remains highly questionable and current OPEC production already approaches levels we had not anticipated until 2018," Macquarie Research analysts said in a note.
Russian average oil production was close to 11 million barrels per day (bpd) in the period of Sept. 1-7, two industry sources told Reuters on Thursday.
The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss the issue at informal talks in Algeria Sept. 26-28.
(By Catherine Ngai; Additional reporting by Devika Krishna Kumar and Scott DiSavino in New York and Christopher Johnson in London; Editing by Chris Reese and David Gregorio)