Oil is slightly firmer as fall in US stockpiles provides support

Seoul — Oil prices rose on Wednesday, supported by a drop in US crude inventories and a weaker dollar, along with concern about a potential shortfall of Iranian oil from November due to US sanctions.

Brent crude oil futures were at $72.83 a barrel at 2.34am GMT, up 20c, or 0.3%, from their last close.

US West Texas Intermediate (WTI) crude futures were up 28c, or 0.4%, at $66.12 a barrel.

US crude inventories fell by 5.2-million barrels in the week to August 17, to 405.6-million barrels, ahead of analysts’ forecasts for a fall of 1.5-million barrels, according to data from industry group the American Petroleum Institute.

Official data from the US Energy Information Administration (EIA) is due at 2.30pm GMT on Wednesday.

“Investors are also confident that [official] inventories in the US will decrease this week,” ANZ Bank said in a note.

Signs of slowing US crude output growth and a weaker US dollar also provided some support to oil prices, said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

The US dollar index against a basket of six major currencies eased on Wednesday to 95.211 after losing 0.7% the previous day, weighed by US President Donald Trump’s comments on monetary policy.

A weaker US dollar makes oil, which is priced in dollars, less expensive to buyers in other currencies.

The US Energy Information Administration last week cut its 2018 US crude production growth to 10.68-million barrels a day, from 10.79-million barrels a day amid lower crude prices.

Concerns also remain over how much oil will be removed from global markets by renewed sanctions on Iran, despite worries that demand growth could weaken amid a trade disputes between the US and China, the world’s two biggest economies.

“The Iran issue continues to occupy traders’ minds,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Iran, a member of oil cartel Opec and Opec’s third-largest oil producer, said earlier this week no other Opec member should be allowed to take over its share of oil exports.

Meanwhile, a Chinese trade delegation is in Washington to discuss trade disputes with the US side. But signs of a thaw were unlikely as Trump told Reuters in an interview on Monday that he did not expect much progress.

Reuters