Oil Rises on Large US Stockpile Draw, Hurricane Jitters

FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo
FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo
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Oil Rises on Large US Stockpile Draw, Hurricane Jitters

FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo
FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo

Oil prices extended gains on Wednesday after industry data showed a large draw in crude inventories in the US, the world's biggest fuel consumer, and as concerns about a hurricane in the Gulf of Mexico kept investors on edge.

Brent crude futures for October climbed 31 cents, or 0.36%, to $85.80 a barrel by 0415 GMT. The October contract expires on Thursday and the more active November contract was at $85.23 a barrel, up by 32 cents.

US West Texas Intermediate crude futures gained 38 cents, or 0.47%, to $81.54, logging its fifth session of gains.

Both benchmarks rallied more than a dollar a barrel on Tuesday as the US dollar slid after the prospects of further interest rate hikes eased following softer US job data.

US crude stocks declined by about 11.5 million barrels in the week ended Aug. 25, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters prior to the data had estimated on average a draw of 3.3 million barrels.

The bigger-than-expected draw in US crude oil stockpiles is positive for the oil market as it suggest firm demand, said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

At the same time, investors bought futures on concerns surrounding Hurricane Idalia, which is churning over the Gulf of Mexico to the east of major US oil and natural gas production sites.

"Concerns over the Hurricane Idalia prompted fresh buying," said Tazawa.

The offshore Gulf of Mexico accounts for about 15% of US oil output and about 5% of natural gas production, according to the Energy Information Administration (EIA).

Oil major Chevron Corp evacuated some staff from the region, but production was continuing at the sites it operates in the Gulf of Mexico.

Worries about fuel demand and the macroeconomic situation in China, the world's biggest oil importer, kept a lid on prices.

While China's economy regained some ground in July, following a contraction in June, the big picture is that various output indicators have levelled off recently and the economy could tip into a downward spiral unless policy support is ramped up soon, said Capital Economics analysts in a client note.



The Worst Market Crashes Since 1929 

A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
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The Worst Market Crashes Since 1929 

A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)

Monday's stock market collapses in Asia and Europe after China retaliated to steep US tariffs revived memories of similar market turmoil after the Covid pandemic and the last global financial crisis.

Analysts called the falls "historic" and some even described it as a "bloodbath", recalling previous collapses since the start of the last century.

Global stocks crashed in March 2020 after the World Health Organization declared Covid-19 a pandemic, putting much of the world under lockdown.

On March 12, 2020 -- the day after the announcement -- Paris fell 12 percent, Madrid 14 percent and Milan 17 percent. London dropped 11 percent and New York 10 percent in the worst fall since 1987.

Further falls came over the following days, with US indexes dropping more than 12 percent.

The rapid response by national governments, which dug deep to keep their economies afloat, helped most markets rebound within months.

The 2008 global financial crisis was caused by bankers in the United States giving subprime mortgages to people on shaky financial footing and then selling them off as investments, fueling a housing boom.

When borrowers became unable to pay their mortgages, millions lost their homes, the stock market crashed and the banking system buckled, culminating with the dramatic bankruptcy of investment bank Lehman Brothers.

From January to October that year, the world's main stock markets fell between 30 and 50 percent.

The start of the millennium saw the deflation of the tech bubble caused by venture capitalists throwing money at unproven companies.

From a record 5,048.62 points on March 10, 2000, the US tech-heavy Nasdaq index lost 39.3 percent in value over the year.

Many internet startups went out of business.

Wall Street crashed on October 19, 1987, on the back of large US trade and budget deficits and interest rates hikes.

The Dow Jones index lost 22.6 percent, causing panic on markets worldwide.

October 24, 1929 became known as "Black Thursday" on Wall Street after a bull market imploded, causing the Dow Jones to lose more than 22 percent of its value at the start of trade.

Stocks recouped most lost ground during the day but the rot set in: October 28 and 29 also saw huge losses in a crisis that marked the beginning of the Great Depression in the United States and a global economic crisis.