HardAssetsInvestor

Written by Sumit Roy  |

September 06, 2012

Crude Oil Inventories Dive, More Drawdowns Expected In Hurricane Isaac’s Wake As Output Remains Shuttered

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The impact of Hurricane Isaac was felt in this week’s crude oil inventory report as expected, but the storm’s effects will linger for at least a few more weeks.

The Department of Energy reported this morning that in the week ending Aug. 31, U.S. crude oil inventories decreased by 7.5 million barrels, gasoline inventories decreased by 2.3 million barrels, distillate inventories increased by 1 million barrels and total petroleum inventories decreased by 9.6 million barrels.

Crude oil prices were already higher ahead of the latest inventory figures, buoyed by a broad rally in financial markets and expectations of a steep drawdown in storage due to Hurricane Isaac.

The EIA data didn’t disappoint bulls, but again, the large draw in stocks was due primarily to Hurricane Isaac. The category 1 storm made its way through the Gulf of Mexico last week, spurring operators to temporarily shut-in production.

Over 1.3 mmbbl/d of crude output was shut-in during parts of last week, and 680 Kbbl/d still remained offline as of Wednesday, according to the Bureau of Safety and Environmental Enforcement.