Crude oil prices climbed higher on Wednesday, aided by data from the U.S. Energy Information Administration that showed a notable drop in crude inventories last week.
Concerns about the likely impact of hurricane Florence, that is moving towards the east coast of the United States, and U.S. sanctions on Iran also contributed to oil’s rise.
Crude oil futures for October delivery ended up $1.12, or 1.6%, at $70.37 a barrel, the best settlement price in about eight weeks.
On Tuesday, crude oil futures ended up $1.70, or 2.5%, at $69.25 a barrel, snapping a four-day losing streak.
According to the weekly report released by the U.S. Energy Information Administration, crude oil inventories dropped by 5.296 million barrels in the week ended September 7, much more than what analysts had expected. Meanwhile, supplies at Cushing, Oklahoma, were down by 1.242 million barrels last week, the EIA report revealed.
The report said that the total U.S. crude oil inventories as of last week, at 396.2 million barrels, was about 3% below the five year average for this time of the year.
Gasoline inventories were up by 1.250 million barrels last week, as compared to expectations for a build of 1.321 million barrels. Distillate stockpiles were up by 6.163 million barrels, more than four times the anticipated rise.
On Tuesday, the American Petroleum Institute had reported that crude supplies decreased by 8.636 million barrels last week.
It is feared that hurricane Florence, which is headed towards South and North Carolina may cause flooding and power interruptions and result in the shutting down of Colonial Pipeline. With people looking to stock up gasoline ahead of the storm, demand for crude has shot up.
To make up for the shortfall in supply due to sanctions against Iranian oil, U.S. President Donald Trump has been encouraging Russia and Saudi Arabia to increase crude output.
According to reports, U.S. Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih on Monday in Washington and discussed the state of world oil markets. Perry is scheduled to meet the Russian Energy Minister Alexander Novak, on Thursday in Moscow, to discuss proposals for sharing technologies and boost output, the report said.