Oil Jumps To Monthly High As Gas Inventories Plummet

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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 August 9.

In the midst of unstable refinery operations due to Harvey, nationwide gasoline stockpiles slid by 8.43 million to 218.3 MMbbl last week, the lowest level since December 2015, a report Wednesday from the Energy Information Administration showed.

The IEA report confirmed the same trend highlighted in OPEC's monthly report out Tuesday.

USA crude settled up $US1.07, or 2.2 per cent, to $US49.30 per barrel and Brent crude was up 89 cents to $US55.16 a barrel. Crude inventories rose by 6.2 million barrels in the week to September 8 to 468.8 million, compared with analysts' expectations for an increase of 3.2 million barrels. That's below the forecast for a rise of 10.1 million barrels by analysts surveyed by S&P Global Platts.

But the EIA also reported that total domestic US crude output jumped by 572,000 barrels a day to 9.353 million barrels. The IEA said in its monthly report that product stocks for Organisation of Economic Cooperation and Development countries were likely to fall below its five-year average because of Harvey.

Crude stocks at the Cushing, Oklahoma, delivery hub for USA crude futures rose by 1 million barrels, EIA said.

"Refinery runs dropped by almost 400,000 [barrels a day] to a 4 1/2 -year low, meaning lower crude demand translated into higher crude flows into storage tanks", said Smith.

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Gasoline stocks fell 8.4 million barrels, the largest draw on record, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop.

"The market is looking for a significant build in oil inventories".

Distillate stockpiles, which include diesel and heating oil, fell 3.2 million barrels, versus expectations for a 1.5 million-barrel drop, the EIA data showed. Gulf Coast gasoline prices rose by 35 cents per gallon to $2.51/gal, Texas state average prices rose 40 cents per gallon to $2.56/gal, and Houston prices rose by 35 cents per gallon to $2.43/gal from August 28 to September 4.

The S&P 500 Energy Index climbed as much as 1.2%, with Chesapeake Energy Corp. jumping 8%, while Pioneer Natural Resources Co. and Devon Energy Corp. gained more than 3.5%.

As Hurricane Irma continues to leave destruction in its wake across Florida, Goldman Sachs Group Inc. says Harvey, the storm that struck Texas more than two weeks ago, remains a bigger concern for the oil market.

Global output was down by 720,000 barrels a day last month from July, to 97.7 million barrels a day, the International Energy Agency said Wednesday.

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.