Fall in US oil stocks pushes prices higher

London — Oil prices edged higher on Thursday, supported by a sharp decline in US crude stocks and a weaker dollar, though gains were capped by an Opec+ decision to stick to its policy of only gradual increases to output.

Brent crude was up 30c or 0.4%, at $71.89 a barrel by 9.17am GMT and West Texas Intermediate (WTI) crude rose 28c, or 0.4%, to $68.87.

US crude inventories dropped by 7.2-million barrels last week, the Energy Information Administration said on Wednesday.

Hurricane Ida, meanwhile, has affected about 80% of the Gulf of Mexico’s oil and gas output. Oil refineries in Louisiana could take weeks to restart.

“Crude oil processing will probably take considerably longer to recover from the outages than crude oil production, which suggests that crude oil stocks will increase in the coming weeks,” said Commerzbank analyst Carsten Fritsch.

On Wednesday, Opec and allied producers including Russia, together known as Opec+, agreed to continue a policy of phasing out record production reductions by adding 400,000 barrels per day (bpd) to the market.

Opec+ also raised its demand forecast for 2022 and faces pressure from the US to accelerate production increases. US President Joe Biden’s administration said it was “glad” the group had reaffirmed its commitment to raising supply.

“What is not so certain … is whether demand will be able to grow as quickly as Opec+ and the market predicts,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen, citing the risk of further coronavirus lockdowns to counter new variants of the virus.

Reuters