Oil equipment and services ETFs were leading the charge Wednesday as crude oil prices rebounded on a record drop in gasoline inventories and a stabilizing energy market.
On Wednesday, the PowerShares S&P SmallCap Energy Portfolio (NasdaqGM: PSCE) rose 3.9%, SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) increased 3.8% and SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) gained 3.1%. The Energy Select Sector SPDR (NYSEArca: XLE), the largest exchange traded fund dedicated to energy equities, was up 1.1%.
The energy sector strengthened while the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, was 1.7% higher and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, advanced 1.4%. Meanwhile, WTI crude oil futures were 1.9% higher to $49.1 per barrel and Brent crude was 1.3% higher to $55.0 per barrel.
Supporting gains in the oil market, the U.S. Energy Information Administration revealed that gasoline stockpiles dipped by 8.4 million barrels in the week ended September 8, the largest weekly decline on record in EIA data going as far back as 1990, the Wall Street Journal reports.
Stocks of distillates also declined by a more-than-expected 3.2 million barrels. Crude stockpiles rose by 5.9 million barrels last week but was still less than the estimated build of 6.2 million barrels.
“To a degree that’s not too surprising…as those refinery recovery efforts continue to be under way,” Tony Headrick, an analyst at CHS Hedging, told the WSJ.
Related: ETF Performance Report: August 2017
Hurricane Harvey knocked out over 20% of U.S. refinery capacity at the start of the month as refiners shut down operations due to flooding. Refineries still only operated at 77% of operable capacity as of last week, which could translate to further builds in crude oil inventory.
Further supporting the oil market outlook, the Organization of Petroleum Exporting Countries revealed its production decreased for the first time since April. The oil cartel, along with other global major oil producers, set production quotas since January to diminish global supply glut.
For more information on the oil market, visit our energy category.