Oil prices spiked on Wednesday afternoon after the Energy Information Administration (EIA) reported a significant decrease in crude oil inventories in the United States, combined with the threat of oil production disruptions in the Gulf as a tropical cyclone has caused major oil companies to evacuate personnel to varying degrees.
The EIA reported on Wednesday morning that oil inventories in the United States had decreased by nearing 10 million bpd last week—surpassing API’s yesterday estimates of an 8.1-million-barrel draw and more than triple what analysts had expected.
Further price support came in the way of a tropical storm that has caused several deepwater Gulf of Mexico producers to evacuate personnel from its offshore platforms, including Chevron, Shell, BP, and BHP.
The tropical “disturbance” set to hit the Gulf may soon become Hurricane Barry, the latest indications from the National Hurricane Center announced late Wednesday afternoon show, which designated the cluster of storms over the GoM as “Potential Tropical Cyclone 2”. The disturbance is likely to become a storm Wednesday or Thursday, with a possible hurricane forming over the weekend.
The Gulf of Mexico accounts for 17% of the total crude oil output in the United States, which the latest EIA data shows to be 12.2 million barrels per day.
WTI prices spiked 4.41% by 3:00pm EST, an increase of $2.55 on the day to $60.38 per barrel. Brent crude, too, saw a marked increase of 4.43% by that time, up $2.84 per barrel to reach $67.00 per barrel.
Geopolitical factors such as the continuing tensions in the Middle East and the ongoing sanctions on crisis-rocked Venezuela have had less of an effect on oil prices.
Wednesday’s WTI prices late Wednesday afternoon rose to the highest since May 22.