Oil Prices Gain Despite Surprise Rise in U.S. Crude Stockpiles

Investing.com – Oil prices rose on Thursday even after weekly data from the U.S. Energy Information Administration (EIA) unexpectedly showed a build in U.S. stockpiles.

On the New York Mercantile Exchange, for November delivery traded 1.2% higher to $72.40 a barrel by 12:15AM ET (04:15 GMT), while on London’s Intercontinental Exchange, for December delivery gained 0.9% to trade at $81.52 a barrel.

The U.S. Energy Information Administration (EIA) said in its weekly report that domestic crude  rose by 1.852 million barrels during the week ended Sept. 21. Market analysts had expected a decline of 1.279 million barrels instead. The American Petroleum Institute, which collects data independently from the industry, reported on Tuesday an increase of 2.903 million barrels for the week in review.

The EIA said that supplies at Cushing, Oklahoma, the key delivery point for delivery of WTI, increased by 461,000 barrels last week.

Oil prices had jumped to near four-year highs in the past two weeks, as

the prospect of tighter markets due to the upcoming U.S. sanctions against major crude exporter Iran in November were said to be supporting oil prices this week.

“We view that crude market risks are heavily skewed to the upside and whilst we are not explicitly forecasting Brent to rise to $100 per barrel, we see material risks of this coming to fruition,” Japanese bank Mitsubishi UFJ Financial Group said in a note to clients.

Iran exported around 3 million barrels per day (bpd) of crude oil at its peak in 2018, equivalent to 3% of global consumption.

“Oil prices remain in the Bulls domain amid concern that U.S. sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

“Markets could still be underestimating the supply crunch from Iran sanctions,” he added.

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