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Oil climbs as U.S. sanctions, stockpile forecasts, raise supply concerns

Oil climbs as U.S. sanctions, stockpile forecasts, raise supply concerns
© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

 

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By Katya Golubkova

TOKYO (Reuters) – Oil prices rose on Friday after the U.S. tightened its sanctions programme against Russian crude exports, raising supply concerns in an already tight market, and global inventories are forecast to decline through the fourth quarter.

Brent futures rose 36 cents, or 0.4%, to $86.36 per barrel and U.S. West Texas Intermediate (WTI) crude gained 53 cents, or 0.6%, to $83.44 a barrel at 0052 GMT.

Brent is set for a weekly gain of 2.1%, while WTI is set to climb 0.8% for the week, after both contracts surged on Monday on the potential for disruptions to Middle Eastern exports after Hamas’ attack on Israel over the weekend threatened a possible wider conflict.

Prices gave back some of those gains during week. But, on Thursday, the U.S. imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.

Russia is the world’s second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply.

Also on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world’s biggest oil importer.

“Supply side issues remained the focus in the crude oil market,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement.

“Sentiment was also boosted after OPEC said it expects crude stockpiles to slump by 3 (million barrels per day) this quarter. That assumes that there are no further supply disruptions emanating from the Israel-Hamas war,” Hynes said.

Markets are awaiting data on China’s producer price index, consumer price index and trade activity in September that is due later on Friday for further signs where the world’s second-biggest economy is heading.

(This story has been refiled to add dropped words in paragraph 5)

Source: Investing.com

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