By Stephanie Yang and Sarah McFarlane
Oil prices rose Wednesday, supported by a record drop in gasoline inventories and signs that market supply and demand are coming back into balance.
Light, sweet crude for October delivery was recently up 69 cents, or 1.4%, at $48.92 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 55 cents, or 1%, to $54.82 a barrel, near a five-month high.
On Wednesday, the U.S. Energy Information Administration reported that gasoline stockpiles fell by 8.4 million barrels in the week ended Sept. 8, the largest weekly drop on record in EIA data going back to 1990. Stocks of distillates decreased by 3.2 million barrels, also exceeding analyst expectations.
Meanwhile, crude stockpiles rose by 5.9 million barrels last week, less than estimates from the American Petroleum Institute for a build of 6.2 million barrels.
"To a degree that's not too surprising...as those refinery recovery efforts continue to be under way," said Tony Headrick, an analyst at CHS Hedging.
The arrival of Hurricane Harvey in Texas knocked out more than 20% of the nation's refining capacity at the start of the month, as refiners shut down operations due to rain and flooding.
According to the latest EIA data, refineries operated at 77.7% of their operable capacity last week, which could mean another large build in crude inventories this week, analysts said. Oil prices gave back some gains following the report, as traders continued to assess the impact of hurricanes Harvey and Irma on levels of supply in the energy market.
U.S. crude production bounced back quickly following the storm, analysts noted, which could exacerbate oversupply as companies continue to pump out crude while demand stalls.
However, reports from the International Energy Agency and the Organization of the Petroleum Exporting Countries this week continued to boost sentiment on Wednesday.
Earlier on Wednesday the International Energy Agency said global oil supplies fell for the first time in four months in August, while also revising its 2017 oil demand estimate up to 1.6 million barrels a day from its July estimate of 1.5 million.
The IEA said that commercial oil inventories in the Organization for Economic Cooperation and Development, or OECD, stayed flat in July month-on-month, at 3.016 billion barrels, about 190 million barrels above their five-year average.
"You've still got some love in the market from the IEA report," said Bob Yawger, director of the futures division at Mizuho Securities USA. "The international reports were all rather supportive of the market."
On Tuesday the Organization of the Petroleum Exporting Countries in its monthly report said its production fell for the first time since April. The cartel, in cooperation with other oil producers including Russia, set production quotas since January in an effort to drain the global overhang of supply.
Gasoline futures fell 0.3% to $1.6513 a gallon and diesel futures rose 1.2% to $1.7608 a gallon.
Write to Stephanie Yang at email@example.com and Sarah McFarlane at firstname.lastname@example.org
(END) Dow Jones Newswires
September 13, 2017 12:51 ET (16:51 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.