Oil rises after unexpected fall in US stocks

Singapore — Oil prices climbed on Wednesday after two sessions of losses as industry data showed an unexpected drop in US crude and fuel stocks, offsetting the concern of a possible rise in supply from Iran.

Brent crude futures rose 41c, or 0.5%, to $91.19 a barrel by 4.22am GMT, while US West Texas Intermediate (WTI) crude was at $89.74 a barrel, up 38c, or 0.4%.

“Undersupply is the key factor that has pumped up the oil price,” said Tina Teng, an analyst at CMC Markets.

US crude, petrol and distillate stocks fell last week, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Crude inventories fell 2-million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase.

More data from the US Energy Information Administration (EIA) will be available at 3.30pm GMT.

Still, concerns about a possible Iran nuclear deal that could unleash more oil into global markets weighed on prices.

Brent and WTI slid about 2% on Tuesday, down for a second consecutive session, as Washington resumed indirect talks with Iran to revive a nuclear deal. Such a deal could lift US sanctions on Iranian oil and quickly add supplies to the market, though a number of vital issues still need to be ironed out.

“With the negotiations ongoing, the oil price is likely to lose steam in the next week, despite the bump higher we’ve seen today,” Teng said, adding that there has also been some profit-taking among investors who have turned cautious after prices hit more than seven-year highs.

Oil prices at near $100 a barrel could also draw more production from the US. The EIA expects US crude output to rise 770,000 barrels a day to 11.97-million barrels a day in 2022.

Meanwhile, governments from the US to Japan are looking at ways to tackle high oil prices as inflation soars.

In Europe, concern over Ukraine eased as French President Emmanuel Macron said he believed steps could be taken to de-escalate the crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.

Reuters