U.S. crude stocks slumped more than 14 million barrels last week in the biggest weekly drawdown since 1999 as imports to the Gulf Coast hit a record low, which analysts attributed to Tropical Storm Hermine. Crude inventories fell 14.5 million barrels for the week ended Sept. 2, compared with expectations for an increase of 225,000 barrels, the U.S. Energy Information Administration said on Thursday.
It was the largest one-week draw since January 1999, particularly after a big decline in imports into the Gulf of Mexico and the U.S. East Coast.
“I have not heard any logical explanation as to why we got a draw like this,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.
“I think you need to see more than one week of this to get worries about oversupply out of the market.”
Oil prices rose sharply on the news, with U.S. crude bouncing to $47.25 a barrel, up about $1 from where oil traded prior to the release. On the day, crude was up more than 3 percent. Other products, including gasoline, also rallied.
Imports into the U.S. Gulf Coast fell to a record low of 2.48 million barrels per day, according to the EIA. Overall, U.S. crude imports fell last week by 1.7 million bpd.
“The reason for the drop in stocks was not that folks were not buying oil, but it was the shipping delayed by the storm,” said James Williams, president of energy consultant WTRG Economics in London, Arkansas.
Tropical Storm Hermine interrupted shipping routes and production last week, even though the storm eventually turned to the northeast and did not harm key facilities in the Gulf.
Refinery crude runs rose 315,000 bpd and utilization rates rose by 0.9 percentage point to 93.7 percent of total capacity, EIA data showed.
There was, however, a notable drop in gasoline stocks , which were fell 4.2 million barrels, compared with analysts’ expectations for a 171,000-barrel drop. Gasoline futures were up 4.8 percent after the data.
“The gasoline drawdown added to the bullish nature of the report. Demand for gasoline remains strong as well, well after the supposed peak driving period,” said John Kilduff, analyst at hedge fund Again Capital LLC.
Distillate stockpiles, which include diesel and heating oil, rose 3.4 million barrels, versus expectations for a 684,000-barrel increase, the EIA data showed.
Crude stocks at the Cushing, Oklahoma, delivery hub fell by 434,000 barrels, EIA said.