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Oil prices inch up on surprise drawdown in US crude stockpiles

Oil prices inch up on surprise drawdown in US crude stockpilesTOKYO: Oil prices extended gains into a fourth session on Wednesday, buoyed as industry data showed a surprise decline in US crude inventories and as geopolitical tensions over the disappearance of a prominent Saudi journalist stoked supply worries.

US West Texas Intermediate crude was up 25 cents, or 0.4 percent, at $72.17 a barrel by 0648 GMT on Wednesday, having settled up 14 cents.

Brent crude was up 26 cents, or 0.3 percent, at $81.67 a barrel, after settling up 63 cents the session before. The global benchmark, which hit a more than two-week low late last week as equity markets dropped, is trading around $5 below a four-year high of $86.74 marked on Oct. 3.

US crude inventories fell by 2.1 million barrels last week, compared with analyst expectations for a build of 2.2 million barrels, American Petroleum Institute data showed after Tuesday’s settlement.

“The market is reacting to the unexpected decline as inventories tend to rise at this time of year,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo, adding that anxieties about the outlook for the global economy were capping gains.

US gasoline stocks dropped by a larger-than-expected 3.4 million barrels, while distillate fuel stockpiles declined by a smaller-than-expected 246,000 barrels, the API data showed.

Inventory data from the US Energy Department’s Energy Information Administration is due at 1430 GMT on Wednesday.

US President Donald Trump gave Saudi Arabia the benefit of the doubt in the disappearance of journalist Jamal Khashoggi even as US lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.

Saudi Arabia has committed to conducting a complete investigation into the disappearance, US Secretary of State Mike Pompeo said before departing the kingdom for Turkey.

Jim Ritterbusch, president of Ritterbusch and Associates, said Saudi Arabia could cut as much as 500,000 barrels per day of crude production “as a warning shot should the US opt to impose any type of sanction in response to the Khashoggi developments”.

A claim by the United States that it aims to reduce Iran’s oil exports to zero is a “political bluff”, the head of the state-run National Iranian Oil Company was quoted as saying on Wednesday.

US sanctions on Iranian oil exports are due to kick in on Nov. 4, while Iran has accused Saudi Arabia and Russia of breaking an OPEC-led agreement on output cuts by producing more crude.

Copyright Reuters, 2018


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