Big oil inventories build and gasoline draw after Harvey

US Hurricanes Affecting Oil Prices, Saudi Could Cut Output

EIA said it was too early to assess the impact of Hurricane Irma, which made landfall on September 10.

Monday's gains came as Hurricane Irma struck the USA southeast with less force than once feared, easing worries that energy demand would be hit hard. Production among the Organization of the Petroleum Exporting Countries fell from its 2017 peak in July as the bloc took efforts to comply with its previous agreement. The U.S. Energy Information Administration lowered its forecast for total U.S. crude oil production, however.

US gasoline prices, however, fell despite a record drawdown in inventories of the motor fuel.

West Texas Intermediate crude for October delivery CLV7, +0.87% jumped 50 cents, or 1%, to $48.73 a barrel, setting it on track for the highest settlement since last Thursday.

Analysts at noted that for oil to rally and hold those gains, the IEA's demand projections have to pan out, along with the ongoing supply cuts, to help inventories fall.

The market is tightening but OPEC's goal to reduce inventories is happening gradually and slowly, perhaps "a little more slowly than they would have liked", Neil Atkinson, head of oil industry and markets at IEA, told Bloomberg in comments on the agency's report.

On Friday, WTI lost 3.3%, causing its discount to Brent to blow out to beyond $6 a barrel, the highest for 2017.

Opec boosted its estimates for the amount of crude it will need to supply next year by 400 000 barrels a day to 32.8 million a day on increased demand projections for Europe and China. The United States Oil Fund (USO) was up 0.11%, while shares in oil-dependent Russian Federation were moving lower.

The EIA forecasts North Sea Brent crude spot prices to average $51 per barrel in 2017 and $52 per barrel in 2018.

Gasoline inventories declined a record 8.4 million barrels on the week with a 4.4% annual decline while distillate stocks fell 3.2 million barrels with a year-on-year decline of 11.2%.

The reduction could possibly contribute to larger-than-typical inventory draws for September, the EIA said.

The Saudi Arabian energy minister Khalid Al Falih agreed with his Venezuelan, Kazakh and UAE counterparts to keep all options open in their push to re-balance world oil markets, including the possible extension of output cuts beyond next March.