Oil prices climbed by over 2 per cent on Wednesday, buoyed by a drop in US weekly crude inventories, which added to a sense in the market of tightening supplies amid export issues in Russia and Iraq.
Brent futures rose by $1.68 or 2.5 per cent to settle at $69.31 a barrel, and the US West Texas Intermediate (WTI) crude futures increased by $1.58 or 2.5 per cent to trade at $64.99 per barrel.
Crude oil inventories in the United States decreased by 600,000 barrels during the week ending September 19, after shrinking by 9.3 million barrels in the week prior, according to new data from the US Energy Information Administration (EIA) released on Wednesday. The move brings commercial stockpiles to 414.8 million barrels according to government data, which is 4 per cent below the five-year average for this time of year.
The EIA’s data release follows figures from the American Petroleum Institute (API) that were released a day earlier, which suggested that crude oil inventories contracted by 3.82 million barrels.
For total motor gasoline (petroleum), the EIA reported a decrease of 1.1 million barrels, after the week prior’s 2.3-million-barrel decrease. The most recent figures showed average daily gasoline production increasing to 9.7 million barrels. For middle distillates, inventories decreased by 1.7 million barrels, with production increasing to 5 million barrels daily. Distillate inventories had increased by 4 million barrels in the week prior and are now 8% below the five-year average for this time of year.
Disruption news also added support as Ukraine’s military struck two oil pumping stations overnight in Russia. A state of emergency was declared in the Russian city of Novorossiisk, which is Russia’s major seaport on the Black Sea and contains major oil and grain export terminals.
Russia is seeing shortages of certain fuel grades as Ukrainian drone attacks reduce refinery runs. In recent months, Ukraine has stepped up drone attacks on energy infrastructure to reduce Russia’s export revenues as both countries continue a three-year war that has not ended.
US President Donald Trump said he believed Ukraine could retake all the territory captured by Russia, in continued support for Ukraine. The Trump administration earlier this month urged European Union countries to phase out Russian oil and gas more quickly.
Eight international oil companies operating in Iraqi Kurdistan reached agreements in principle with Iraq’s federal and Kurdish regional governments to resume oil exports.