Oil prices turn up after earlier steep falls

Tokyo — Oil prices rose on Wednesday after steep falls in the previous session, although US crude trailed gains for international benchmark Brent after US crude inventories fell less than expected.

West Texas Intermediate crude futures were up 6c at $57.68 by 3.27am GMT,  having fallen 3.3% on Tuesday.

Brent crude futures were up 25c at $64.60, or 0.4%. They ended down 3.2% in the previous session.

Crude inventories fell by 1.4-million barrels in the week to July 12 to 460-million, industry group the American Petroleum Institute (API) said on Tuesday. That compared with analysts’ expectations for a decrease of 2.7-million barrels.

Official data is due out later today from the US government’s Energy Information Administration (EIA). If it confirms the fall it will be the fifth consecutive weekly decline, the longest stretch since the beginning of 2018.

“Market participants are looking ahead to the weekly IEA oil inventory data for the US, which is expected to show yet another drawdown,” Abhishek Kumar, head of analytics at Interfax Energy in London.

“Nevertheless, oil production in the Gulf of Mexico returning to normal following Hurricane Barry will limit price gains,” Kumar said.

More than half the daily crude production in the US Gulf of Mexico remained offline on Tuesday in the wake of Hurricane Barry, the US drilling regulator said, as most oil companies were re-staffing facilities to resume production.

The Bureau of Safety and Environmental Enforcement said 1.1- million barrels a day of oil, or 58% of the region’s total, and 1.4-billion cubic feet a day of natural gas output remained shut.

The smaller than expected decline in crude stocks suggested production shut-ins caused by Hurricane Barry late last week had little impact on inventories.

Fuel stocks also fell, declining by 476,000 barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel decline.

Distillate fuels stockpiles, which include diesel and heating oil, rose by 6.2-million barrels, compared with expectations for a 613,000-barrel gain, the API data showed.

Oil prices fell on Tuesday after US President Donald Trump said progress has been made with Iran, signalling tensions could ease in the Mideast.

However, Iran later denied it was willing to negotiate over its ballistic missile programme, contradicting a claim by US secretary of state Mike Pompeo, and appearing to undercut Trump’s statement.

Tensions between the US and Iran over Tehran’s nuclear programme have lent support to oil futures, given the potential for a price spike should the situation deteriorate.

Reuters