Oil edges up amid reports of tightening US supply

Singapore — Oil prices edged up on Wednesday following a report of tightening US fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the US.

Prices were also pushed up by looming US sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel Opec to raise output to make up for the disruptions.

US West Texas Intermediate (WTI) crude futures rose 46c, or 0.6%, to $74.60 a barrel at 3.43am GMT, compared with their last settlement. On Tuesday, WTI hit its highest since November 2014 at $75.27.

Brent crude futures were changing hands at $78.10 a barrel, up 34c, or 0.4%, from their last close.

Trading activity is expected to be limited on Wednesday by the US Independence Day holiday.

US crude inventories fell by 4.5-million barrels to 416.9-million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday. Petrol and distillate stocks, which include diesel and heating oil, also fell, the API said.

“The draw in distillates was against expectations,” said Sukrit Vijayakar, MD of energy consultancy Trifecta.

The decline in fuel inventories was largely down to the outage at Syncrude Canada’s 360,000 barrels a day oil sands facility near Fort McMurray, Alberta. The outage is expected to last until the end of July.

But brokerage Phillip Futures said the lower stocks come “as [petrol] demand spikes on peak driving season in the northern hemisphere”.

Outside North America, looming US sanctions against major oil exporter Iran were the focus of attention.

The US government has demanded that all countries stop buying Iran’s oil from November.

To make up for potential shortfalls in supply from Iran and other disruptions including in Libya and Venezuela, Opec has agreed with Russia and other oil-producing non-Opec members to raise output from July.

Opec-member Iran, however, has warned it will not accept other producers reaping the benefits by taking its market share.

Iranian President Hassan Rouhani on Tuesday said it was “unwise to imagine that some day all producer countries will be able to export their surplus oil and Iran will not be able to export its oil”.

Reuters