Oil prices rise on declining US crude stockpiles

SINGAPORE: Oil prices rose on Wednesday after a report of a decline in US crude inventories and looming sanctions against Iran raised expectations of tightening supply, while top producer Russia warned of a fragile global market.
US West Texas Intermediate (WTI) crude futures were at $69.93 per barrel at 0646 GMT, up 68 cents, or 1 per cent, from their last settlement. WTI futures gained 2.5 per cent in the previous session.
Brent crude futures climbed 30 cents, or 0.4 per cent, to $79.36 a barrel. Brent has climbed for four straight sessions, gaining 2.2 per cent the previous day.
“Oil prices jumped overnight as American Petroleum Institute inventory data showed a large drawdown in inventories,” said William O’Loughlin of Australia’s Rivkin Securities.
US crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday.
Official data will be published by the US Energy Information Administration (EIA) on Wednesday.
Outside the United States, traders have been focusing on the impact of US sanctions against Iran that will target oil exports from November.
Washington has put pressure on other governments to also cut imports, and many countries and companies are already falling in line and reducing purchases, triggering expectations of a tighter market.
“The looming supply risks in the Middle East, particularly US sanctions on Iran, should outweigh the concerns of oil demand growth slowdown from the emerging market crisis and China-US trade tensions,” ANZ bank said on Wednesday.
Russian Energy Minister Alexander Novak on Wednesday warned of the impact of US sanctions against Iran.
“This is huge uncertainty on the market — how the countries, which buy almost 2 million barrels per day of Iranian oil will act. The situation should be closely watched, the right decisions should be taken,” he said.
Novak said global oil markets were “fragile” due to geopolitical risk and supply disruptions. “It is related to the fact that not all the countries have managed to restore their market and production,” he said, referring to outages and falling production in Mexico and Venezuela. — Reuters