Big drop in oil stocks in US lifts oil price

London — Oil prices rose on Wednesday after a reported sharp drop in US crude stocks as Opec member Iraq said the producer group will discuss whether to deepen output cuts.

Brent crude futures gained 74 US cents, or 1.25%, to $63.12 a barrel by 8.57am GMT, while West Texas Intermediate futures were up 81c, or 1.4%, at $58.21 a barrel.

Oil prices have risen more than 7% in September, supported by declines in global inventories and signs of an easing in trade tension between the US and China, the world’s two largest economies and energy consumers.

Prices rose earlier this week after Prince Abdulaziz bin Salman, Saudi Arabia’s new energy minister, said oil policy would not change and a deal with other producers to cut output by 1.2-million barrels per day would be maintained.

But on Wednesday, Iraq’s oil minister Thamer Ghadhban said oil cartel Opec will discuss at a ministerial meeting on Thursday whether to deepen cuts. The previous OPEC meeting had discussed cuts of 1.6-million to 1.8-million barrels per day, he said.

Prices rebounded earlier after data from the American Petroleum Institute (API) late on Tuesday showed US crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast.

Petrol stocks also fell sharply, while distillate inventories increased, the API said.

“The API report is quite constructive for the oil market as it points to a tightening domestic oil market in the face of flat production and stronger demand,” Dutch bank ING said in a note.

Official inventory numbers will be released by the US Energy Information Administration (EIA) later on Wednesday.

Prices had ended lower on Tuesday on speculation that sanctions-hit Iran could revive its crude exports after the departure of US President Donald Trump’s hawkish adviser on national security.

Iran’s oil exports were slashed more than 80% earlier in 2019 after the US re-imposed sanctions following its exit from a 2015 nuclear deal between Tehran and world powers.