NYMEX Gasoline   $1.6473 DN $0.0090

NEWS

Oil tallied a third straight gain Wednesday, with U.S. prices settling at a five-week high and Brent at its highest since April, buoyed by a report from the International Energy Agency that showed global crude production fell for the first time in four months in August.

Traders also weighed weekly data from the U.S. government which revealed a smaller-than-expected rise in crude supplies, a hefty drop in gasoline stockpiles and a jump in domestic output as production in the Gulf of Mexico recovered in the wake of disruptions from Hurricane Harvey.

October West Texas Intermediate crude for October delivery added $1.07, or 2.2%, to settle at $49.30 a barrel on the New York Mercantile Exchange, for the highest finish since Aug. 9. November Brent the global benchmark, climbed 89 cents, or 1.6%, to end at $55.16 a barrel, which was the highest finish since mid-April. Brent prices rose “on signs of stronger demand and tightening OECD inventories as signaled by today’s monthly IEA report,” said Matt Smith, director of commodity research at ClipperData. “WTI has been lagging [Brent] of late due to the bearish impact of Hurricane Harvey on refining activity,” but played catch up Wednesday.

Early Wednesday, the U.S. Energy Information Administration said domestic crude supplies climbed by 5.9 million barrels for the week ended Sept. 8. That’s below the forecast for a rise of 10.1 million barrels by analysts surveyed by S&P Global Platts. The American Petroleum Institute had reported late Tuesday an increase of 6.2 million barrels.

But the EIA also reported that total domestic U.S. crude output jumped by 572,000 barrels a day to 9.353 million barrels. The numbers show that “Hurricane Harvey’s disruptive influence continues,” said Smith, director of commodity research at ClipperData. Harvey made landfall on the Texas coast on Aug. 25. “Refinery runs dropped by nearly 400,000 [barrels a day] to a 4½-year low, meaning lower crude demand translated into higher crude flows into storage tanks,” said Smith. “On the flip side, a lack of refining activity means we have seen some hefty draws to the products.” Gasoline stockpiles were down 8.4 million barrels for the week, the EIA said. That was larger than the S&P Global Platts survey expectations for a 4 million-barrel fall. Phil Flynn, senior market analyst at Price Futures Group, said the weekly drop was the largest in history and that the storms were to blame. The government also said distillates, which include heating oil, declined by 3.2 million barrels, well above the forecast for a 300,000-barrel draw. “On the one hand, the smaller-than-anticipated crude [supply] build, coupled with large draws to product stocks should provide support to crude prices, but continued weakness in refinery demand and rebounding production could serve to overshadow this signal,” Troy Vincent, oil analyst at ClipperData, told MarketWatch.

On Nymex, October gasoline fell about a penny to $1.647 a gallon, while October heating oil added 2.8 cents, or 1.6%, to $1.769 a gallon. October natural gas climbed 5.7 cents, or 1.9%, to $3.058 per million British thermal units.

Meanwhile, the Paris-based IEA said in monthly report that the oil market is starting to tighten due to robust demand and a drop in output from both the Organization of the Petroleum Exporting Countries and other producers. “Outright benchmark crude prices gained in August, reflecting higher demand in the northern hemisphere and tight physical markets for oil products,” the IEA said. The agency said global oil supply dropped 720,000 barrels a day last month from July, to 97.7 million barrels a day, largely due to civil unrest in Libya and disruptions to U.S. production due to Hurricane Harvey. The IEA report confirmed the same trend highlighted in OPEC’s monthly report out Tuesday.

OPEC kingpin Saudi Arabia recently floated the idea of extending the output accord and has discussed it with other cartel members including Venezuela and Kazakhstan, according to media reports. The cartel could call an extraordinary meeting for mid-March to discuss a possible extension, Reuters reported.