Crude Oil Prices Settle at 3-Week Highs as Supplies Sink, Iran Exports Ease

Investing.com – WTI crude oil prices settled at three-week highs Wednesday on a government inventory report showing U.S. crude supplies fell sharply last week, and signs U.S. sanctions on Iran were starting to hurt the Islamic Republic’s crude exports.

On the New York Mercantile Exchange for October delivery rose 1.4% to settle at $69.51 a barrel, while on London’s Intercontinental Exchange, rose 0.98% to trade at $77.04 barrel.

Inventories of U.S. crude fell by 2.566 million barrels for the week ended Aug. 24, greater than expectations for of just 0.686 million barrels, according to data from the Energy Information Administration (EIA).

The large draw in crude supplies comes as imports fell by about 0.657 million bpd, while exports rose by 0.624 million bpd, data from EIA showed.

Production was unchanged at 11.0 million barrels a day (bpd), which also supported the draw in crude supplies, after rising for two-straight weeks.

Gasoline inventories by 1.554 million barrels, confounding expectations for a build of 0.370 million barrels, while supplies of distillate — the class of fuels that includes diesel and heating oil — by 0.837 million barrels, against expectations for a build of 1.592 million barrels.

The draw in products came as refinery activity fell to 96.3% of their capacity last week from 98.1% the prior week, with inputs averaging about 17.57 million barrels per day during, down 0.326 million barrels from the prior week, the EIA said.

The bullish inventory report helped oil prices add to their earlier gains, which followed data showing a drop in Iranian crude exports as U.S. sanctions forced buyers to seek alternatives.

Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the Nov. 4 start date for a second round of U.S. economic sanctions, preliminary trade flows data on Thomson Reuters Eikon show.

President Donald Trump pulled the United States out of the Iran nuclear agreement in May, allowing sanctions against Iran to snap back into place. The first wave of sanctions went into effect last month and a second set of sanctions on Iran’s crude exports are slated for early November.

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