Crude oil futures settled lower on Wednesday as traders were unfazed by government reports that revealed a large weekly drop in supplies before the impact of Hurricane Harvey, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, October West Texas Intermediate crude shed 48 cents, or 1%, to settle at $45.96 a barrel —its lowest finish in over a month.
On the London ICE Futures Exchange, October Brent crude, the global benchmark, plunged by $1.14, or 2.2%, to settle at $50.86 a barrel.
On Wednesday, the Energy Information Administration reported that domestic crude supplies fell by 5.4 million barrels for the week ending August 25. Analysts surveyed by S&P Global Platts produced a consensus forecast for a drop of 1.5 million barrels. Late Tuesday, the American Petroleum Institute reported a decline of 5.8 million barrels.
“Due to the situation in the Houston and Louisiana area, multiple refineries have shut down including the nation’s largest refinery (Motiva Enterprises’ facility in Port Arthur),” said John Macaluso, an analyst at Tyche Capital Advisors.
“Next week’s EIA data should see large draws in products due to refinery outages, prompting large builds in oil inventories,” said Macaluso. Nearly 1.4 million barrels of extra oil that “won’t be refined to fuels will be sent to storage as long as refineries are shut-in.”
Texas refinery shutdowns due to the weather disruption mean that crude inventories will rise as refiners no longer have the capacity for further oil intake. That has weighed on crude prices.
Back on the New York Mercantile Exchange, October natural gas futures slipped by 4.4 cents, or 1.5% to settle at $2.939 per million British thermal units.