Oil Prices Jump On Large US Crude Stock Draw

New York: Oil prices soared more than four per cent on Thursday after US inventory data showed a surprisingly large drawdown in crude stocks, driven by fewer imports into the US Gulf Coast due to Tropical Storm Hermine last week.

US crude stocks dropped by 14.5 million barrels last week to 511.6 million barrels, the biggest weekly drop in stockpiles since January 1999, according to the US Energy Information Administration. That compares with expectations of an increase of 225,000 barrels.

Brent crude oil rose $1.76 to $49.74 a barrel, a 3.67 per cent gain, by 1529 GMT (8:59 p.m. in India).

US crude was up $1.74 at $47.24 per barrel, a 3.82 per cent gain.

Tropical Storm Hermine, which threatened the Gulf Coast refining region last week, led to the loss of some US oil production and limited imports and shipping. Gulf Coast crude imports hit the lowest levels on record last week, data showed.

"We firmly feel that this is going to be a one-off, and we'll see large builds," said Tariq Zahir, an analyst at Tyche Capital Advisors.

Gasoline futures also jumped after the data release, rising by more than five per cent on higher than expected draws, data showed.

Oil was also buoyed earlier by robust trade data from China, which showed its crude imports in August surged by nearly a quarter from a year ago to the second-highest ever, driven by independent refiners rushing to cash in on low oil prices before import quotas expire in December.

Crude prices jumped on Monday after Russia and Saudi Arabia agreed to cooperate on stabilising the oil market. Uncertainty remains, however, over the chances of an output freeze being agreed by producer nations, particularly after an April meeting in Doha failed to reach an agreement.

"Implementation remains highly questionable and current OPEC production already approaches levels we had not anticipated until 2018," Macquarie Research analysts said in a note.

"Even if a 'freeze' truly materializes, it will provide little fundamental impact."

Russian average oil production was close to 11 million barrels per day (bpd) in the period of September 1-7, two industry sources told Reuters on Thursday.

The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss the issue at informal talks in Algeria September 26-28.