Oil Surges After U.S. Crude Supplies Tumble the Most Since 1999

Oil jumped the most in almost five months after the biggest drawdown in U.S. crude inventories in 17 years.

Crude inventories fell 14.5 million barrels last week, the biggest drop since January 1999, according to the Energy Information Administration. A 905,000-barrel gain was projected by analysts surveyed by Bloomberg before the release. Tropical Storm Hermine moved into the Gulf of Mexico on Aug. 28, disrupting shipping and output before moving northeast. Imports tumbled 1.85 million barrels, while refinery activity increased.

“We had an enormous drop in imports, which explains the inventory number,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $5.2 billion. “Imports were off by almost 1.9 million barrels a day last week, which, when multiplied by seven, is pretty close to the size of the draw. I’m surprised the market is reacting as strongly as it is because there should be big build next week.”

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