Oil prices rise amid drop in U.S. stockpiles, supply worries

By Aaron Sheldrick and Osamu Tsukimori

TOKYO (Reuters) – Oil rose for a third day on Thursday amid another drawdown in U.S. inventories and strong U.S. gasoline demand, while signs OPEC may not raise output to address shrinking supplies from Iran also supported prices.

Global benchmark Brent crude () was up by 20 cents, or 0.3 percent, at $79.60 by 0214 GMT, after gaining half-a-percent on Wednesday.

U.S. West Texas Intermediate crude () was up 55 cents, or 0.8 percent, at $71.67 a barrel, after rising nearly 2 percent the previous session.

U.S. crude oil stockpiles fell for a fifth straight week to 3-1/2 year lows in the week to Sept. 14, while gasoline inventories also showed a larger-than-expected draw on unseasonably strong demand, the Energy Information Administration said on Wednesday. [EIA/S]

Crude inventories declined by 2.1 million barrels, the EIA data showed, compared with expectations for a decrease of 2.7 million barrels.

“The bulls are back in charge, even more so after traders were conveying a high degree of resistance to the unexpected build on the API survey,” said Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore.

He was referring to the weekly survey from the oil industry group the American Petroleum Institute (API) on Tuesday that indicated U.S. stocks had risen by 1.2 million barrels last week. [API/S]

U.S. sanctions affecting Iran’s oil exports come into force on Nov. 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.

The Organization of the Petroleum Exporting Countries and other producers including Russia meet on Sunday in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.

OPEC sources have told Reuters no immediate action was planned and producers would discuss how to share a previously agreed output increase.

(For a graphic on ‘Iran crude oil shipments from Jan 2016 to August 2018’ click https://reut.rs/2p69koR)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.