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Crude Oil Jumps More than 4% After Surprise Draw of US Inventories

September 16, 2020 at 20:08 by Vladimir Vyun

Futures for crude oil jumped more than 4% today after a surprise drawdown of US crude oil inventories. Meanwhile, natural gas sank more than 5%.

The US Energy Information Administration reported that crude oil stockpiles decreased by 4.4 million barrels last week. That was a total surprise to experts who were expecting an increase of 2.1 million barrels. The reserves gained 2.0 million barrels the week before.

Crude also gained due to decreased supply from the United States. Hurricane Sally is raging across the Gulf of Mexico, causing a large number of off-shore facilities to shut down. According to the report from the Bureau of Safety and Environmental Enforcement, as much as 508,366 barrels per day were shut in on Wednesday. As much as 27.48% of the Gulf production was shut in, up from 26.87% yesterday. As for natural gas, 29.7% of production was shut in today, up from 28.03% on Tuesday.

The weakness of the US dollar could also play some part in the rally of the commodity priced in the greenback. The US currency was soft after the Federal Reserve announced that it is planning to keep interest rates low for a number of years. Accommodative monetary policy is usually bad for currencies, and the dollar is not an exception.

Futures for delivery of WTI crude oil in October jumped by $1.83 (4.78%) to $40.11 per barrel as of 20:04 GMT on NYMEX today. November contract for Brent crude rallied by $1.71 (4.22%) to $42.24 per barrel on ICE. At the same time, natural gas for delivery in October sank by $0.12 (5.04%) to $2.24 per million British thermal units on NYMEX.

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