Oil prices have made a major turn the past few days and are up 4.6 percent as Hurricanes and Typical weather have shut down off shore drilling rigs forcing the U.S. to use their massive oversupply in storage.
In only the last week the U.S. had to use 14.5 million barrels from their storage, mostly from the east coast according to Government data.
1.8 million barrels a day less are shipped into the U.S. from countries like Saudi Arabia and Nigeria due to rigs shut down and loss production.
Oil prices jumped on the weekly Energy Information Administration report, adding to gains made late Wednesday on similar data from the American Petroleum Institute. West Texas Intermediate futures for October settled at $47.62 per barrel, a gain of more than 4.6 percent.
“This is an aberrant report of the first order,” said John Kilduff of Again Capital. “I think the East Coast shipments were probably affected by Gaston earlier. There was also a barge that got sunk in the Houston Ship Channel. That also affected the ability of ships to move in and out of the channel.”
Kilduff said the runup in oil prices is overdone though there could be further impacts in next week’s data from Hermine which swirled off the East Coast. A positive for prices was the fact that oil production declined last week, instead of rising as it has lately. The U.S. produced 8.46 million barrels last week, down from 8.49 million.
This is good news for the Canadian economy as they are in dire needs of higher oil prices, with bad weather on the east coast oil prices will continue to rise and hopefully stay.