Oil advanced after U.S. crude inventories slid to the lowest since October 2018 and as broader markets gained.

Futures in New York rose as much as 2.2 per cent on Wednesday. Domestic crude stockpiles fell for a seventh straight week to about 414 million barrels, according to an Energy Information Administration report, signaling a rapidly tightening market. Meanwhile, U.S. equities surged as worries about China Evergrande Group’s debt woes eased.

“The Chinese economic uncertainty is now easing with Beijing moving to contain fears of a spiraling debt crisis at Evergrande,” said Andrew Lebow, senior partner at Commodity Research Group.

Crude prices have increased this month after extreme weather disrupted U.S. supplies, and as a rally in natural gas spurred expectations consumers may switch to oil. Crude may surge to US$90 a barrel if the approaching winter in the northern hemisphere proves colder than normal, according to Goldman Sachs Group Inc. 

Traders will also be watching the U.S. Federal Reserve’s latest interest rate decision later Wednesday, with the potential timeline for tapering stimulus measures key for investors.

Prices:

• West Texas Intermediate crude for November delivery climbed US$1.28 to US$71.77 a barrel at 12:00 p.m. in New York
• Brent for the same month rose US$1.37 to US$75.73 a barrel

The EIA data also showed U.S. gasoline inventories unexpectedly rose by 3.47 million barrels last week as U.S. Gulf Coast refineries ramped up operations after recent storms.

The gasoline crack spread, a rough measure of the profit from refining crude into fuel, slumped to the lowest level since February.

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