Oil Up, Boosted by Large Draw in U.S. Crude Supplies, Bright Fuel Demand Outlook

© Reuters.

By Gina Lee

AiVIF.com – Oil was up Wednesday morning in Asia, with data showing a larger-than-expected draw in U.S. crude oil supplies. Expectations that COVID-19 vaccination rates will also contribute to economic recovery from COVID-19 also improved the fuel demand outlook.

Brent oil futures rose 0.63% to $74.06 by 11:47 PM ET (3:47 AM GMT) and WTI futures gained 0.61% to $70.89. Both Brent and WTI futures were above the $70-mark.

Crude oil supply data from the American Petroleum Insititute, released on Tuesday, showed a draw of 5.437 million barrels for the week ending Sep. 10. This was higher than the 3.903-million-barrel draw predicted in forecasts prepared by AiVIF.com and the previous week’s 2.882-million-barrel draw.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.

The draw comes as the Gulf of Mexico struggles to restore production that was disrupted by Hurricane Ida, with Tropical Storm Nicholas hitting just two weeks later.

"Ida's impact was a lot greater than many anticipated and production in the Gulf of Mexico region might struggle to return until Nicholas is done punishing the region with torrential rain," OANDA senior analyst Edward Moya told Reuters.

Nicholas moved slowly through the region on Tuesday, cutting power to hundreds of thousands of homes and businesses. However, refineries in Texas continued to run normally.

Meanwhile, the International Energy Agency (IEA) said on Tuesday that COVID-19 vaccine rollouts could drive an economic rebound after global oil demand2‘s three-month slide due to the spread of COVID-19's Delta variant and the ensuing restrictive measures.

In Asia Pacific, China released details of its plans to sell crude from its strategic reserves, which added pressure to prices. The National Food and Strategic Reserves Administration will auction off around 7.4 million barrels of crude on Sep. 24.