Decline in US stockpiles lifts oil

Singapore — Oil prices inched up on Thursday, extending solid gains from the previous session on a fall in US crude inventories and expected disruptions to supply from Iran and Venezuela.

International Brent crude oil futures were at $77.21 a barrel at 1.14am GMT, up 7c from their last close.

US West Texas Intermediate (WTI) crude futures were up 14c at $69.65 a barrel.

The rises came after crude hit multi-week highs during the previous session.

US commercial crude inventories fell by 2.6-million barrels in the week to August 24, to 405.79-million barrels. US production was flat from the previous week’s record 11-million barrels a day.

“Oil prices rose on the back of an unexpected US inventory draw, the second week in a row of declines, together with gasoline demand reaching a record high,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“The looming sanctions against Iran are beginning to impact oil supply lifting crude prices,” said Alfonso Esparza, analyst at futures brokerage Oanda.

Oil cartel Opec, of which Iran is the third-biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian oil supply after US sanctions against Tehran start in November, the head of Iraq’s state-oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.

Iran’s August crude oil exports are likely to drop to just more than 2-million barrels a day, versus a peak of 3.1-million barrels a day in April, as importers bow to American pressure to cut orders.

The International Energy Agency (IEA) warned of a tightening market towards the end of the year, due to a combination of supply concerns, such as Iran and also Venezuela, and strong demand especially in Asia.

“Definitely there are some worries that oil markets can tighten towards the end of this year,” the agency’s chief, Fatih Birol, told Reuters on Wednesday.

Crude oil exports in crisis-struck Opec-member Venezuela have halved in recent years to only about 1-million barrels a day.

Reuters