Oil prices gain for second day as US stockpiles drop

London — Oil prices rose for a second straight day on Friday as data showed a decline in US inventories, but were heading for a weekly loss amid uncertainty about global supplies after an OPEC+ impasse.

Brent crude oil futures were up 66c, or 0.9%, at $74.78 a barrel by 10.50am GMT. US West Texas Intermediate futures were up 82c, or 1.1%, at $73.76/bbl.

Prices on either side of the Atlantic were on track for a weekly loss of almost 2%, dragged down by the collapse of output talks between Opec and allies including Russia, together known as Opec+.

US crude and petroleum stocks fell and demand for petrol reached its highest since 2019, the US Energy Information Administration said on Thursday, signalling increasing strength in the economy.

“A bullish EIA stock report helped the oil market rebound,” said Stephen Brennock of oil broker PVM. “Clearly, US oil markets are tight. However … the only way to prevent further losses is for the threat of an OPEC+ price war to be contained.”

Gains were capped by concerns that Opec+ could be tempted to abandon output limits that they have adhered to during the Covid-19 pandemic. Their talks on supply have broken down because of an impasse between major producers Saudi Arabia and the United Arab Emirates.

The two Gulf Opec allies are at odds over a proposed deal that would have brought more oil to the market.

Russia was trying to mediate in an effort to strike a deal to raise output, OPEC+ sources said on Wednesday. The US had high-level talks with officials in Saudi Arabia and the UAE, the White House said on Tuesday.

The global spread of the Delta variant of the coronavirus and fears that it could stall a worldwide economic recovery also weighed on prices.

Reuters