Brent edges over $73 on report showing decline in US inventories

London — Oil traded above $73 a barrel on Wednesday as an industry report showing a drop in US crude inventories and US sanctions on Opec producer Iran pointed to tighter supplies.

The American Petroleum Institute (API) reported US crude stocks fell last week by 5.2-million barrels, more than three times the drop analysts expected. The government’s official figures are due at 2.30pm GMT.

“The API inventory data published after the close of trading yesterday are lending buoyancy to prices,” Commerzbank analyst Carsten Fritsch said.

“Thus the official inventory data this afternoon are also likely to show a more marked inventory reduction.”

Brent crude, the international benchmark, rose 71c to $73.34 a barrel by 8.53am GMT. US crude gained 55c to $66.39.

Oil also found support from a weak dollar, which has slipped this week in response to US President Donald Trump’s comment that he was “not thrilled” by the Federal Reserve’s interest rate increases.

A weaker dollar makes oil less expensive for buyers using other currencies.

The prospect of a drop in oil exports from Iran, the third-largest producer in Opec, in response to new US sanctions is also supporting the market.