Oil soars, Brent hits $50/bbl as U.S. Gulf imports hit record low

September 7, 2016 8:38 PM EDT

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By Scott DiSavino

NEW YORK (Reuters) - Oil prices surged over 4 percent on Thursday, with Brent briefly touching $50 a barrel for the first time in two weeks, after a surprisingly huge drawdown in U.S. crude stocks as Gulf Coast imports slumped to a record low.

Brent rose $2.01, or 4.2 percent, to settle at $49.99 a barrel, its highest close in almost three weeks.

U.S. crude ended at $47.62 per barrel, up $2.12, or 4.7 percent, the biggest daily percentage gain for U.S. futures since April.

U.S. crude stocks dropped 14.5 million barrels last week to 511.4 million barrels, the biggest weekly drop in stockpiles since January 1999, according to government data.

Imports into the U.S. Gulf Coast fell to 2.5 million barrels per day, the lowest since data collection began in 1990. [EIA/S]

Traders said the imports fell as ships delayed offloading cargos in Texas and Louisiana due to Tropical Storm Hermine.

Hermine, which threatened the Gulf Coast refining hub last week, scuttled some U.S. oil production and limited imports and shipping, ultimately did not harm Gulf facilities.

"The market missed the imports but I think the price increase is temporary as opposed to a new uptrend," said Dominick Chirichella, senior partner at Energy Management Institute in New York.

"The vast majority of the crude stock decline will be made up in next week’s numbers when we should see a big bump up in imports," he said.

Key U.S. oil spreads remained little changed after the EIA report. Tariq Zahir, spreads trader at Tyche Capital in New York, said the "drawdown may be viewed as a one-off situation."

Gasoline futures jumped over 5 percent after the data release, on higher than expected draws and rising refinery utilization in the Midwest, traders said. Gasoline margins <1RBc1-CLc1> also rose sharply.

Oil prices drew support earlier when Chinese trade data showed crude imports in August surged nearly 25 percent from a year ago to the second-highest ever, as independent refiners took advantage of low oil prices before import quotas expire in December.

On the bearish side, Russian average oil production rose close to 11 million bpd during Sept. 1-7, industry sources told Reuters, from 10.71 million bpd in August.

The increased output - which may not be sustained throughout the month - comes as Russia and Saudi Arabia are talking about cooperation to stabilize global oil markets.

On Monday, crude prices jumped after both major producers agreed to cooperate on stabilizing the oil market. Uncertainty remains over the chances that producer nations will agree on an output freeze. An April meeting in Doha, Qatar, failed to reach an agreement.

The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss the issue at informal talks in Algeria Sept. 26-28.

"Implementation remains highly questionable and current OPEC production already approaches levels we had not anticipated until 2018," Macquarie Research analysts said in a note.

(Additional reporting by Devika Krishna Kumar and Catherine Ngai in New York and Christopher Johnson in London; Editing by Marguerita Choy and David Gregorio)

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