Oil futures declined on Wednesday, with U.S. prices settling at their lowest in nearly a month, pressured by a sharp, but temporary drop in domestic crude supplies and production, as output in the Gulf of Mexico sees a strong recovery from Hurricane Laura.
West Texas Intermediate crude for October delivery fell $1.25, or 2.9%, to settle at $41.51 a barrel on the New York Mercantile Exchange. That was the lowest front-month finish since Aug. 7, according to FactSet data. November Brent crude the global benchmark, lost $1.15, or 2.5%, at $44.43 a barrel on ICE Futures Europe.
The supply declines from the Energy Information Administration were “not surprising,” as Hurricane Laura caused a “bigger draw than what was forecasted in crude and gasoline” supplies, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.
The EIA reported Wednesday that U.S. crude inventories fell by 9.4 million barrels for the week ended Aug. 28, marking a sixth weekly decline in a row.
That compared with an average forecast by analysts polled by S&P Global Platts for a fall of 1.2 million barrels. The American Petroleum Institute on Tuesday reported a drop of 6.4 million barrel. The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged up by about 100,000 barrels for the week.
Total U.S. crude production also dropped by 1.1 million barrels last week to stand at 9.7 million barrels a day. The drop coincides with the output shut ins related to Hurricane Laura, which touched down on the U.S. Gulf Coast early on Aug. 27.