Oil Prices Rise amid Fall in US Stockpiles, Supply Worries

Global benchmark Brent crude LCOc1 was up by 26 cents, or 0.3 percent, at $79.66 by 0611 GMT, after gaining half-a-percent on Wednesday.

US West Texas Intermediate crude CLc1 was up 60 cents, or 0.8 percent, at $71.72 a barrel, after rising nearly 2 percent the previous session, Reuters reported.

US crude oil stockpiles fell for a fifth straight week to 3-1/2 year lows in the week to Sept. 14, while gasoline inventories also showed a larger-than-expected draw on unseasonably strong demand, the Energy Information Administration said on Wednesday.  

Crude inventories declined by 2.1 million barrels, the EIA data showed, compared with expectations for a decrease of 2.7 million barrels.

“The bulls are back in charge, even more so after traders were conveying a high degree of resistance to the unexpected build on the API survey,” said Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore.

He was referring to the weekly survey from the oil industry group the American Petroleum Institute (API) on Tuesday that indicated US stocks had risen by 1.2 million barrels last week.  

US sanctions affecting Iran’s oil exports come into force on Nov. 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.

The Organization of the Petroleum Exporting Countries and other producers including Russia meet on Sunday in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.

“The current market betting line suggests price levels rather than global supply levels will be the key determinant on turning on the oil taps,” Innes said.

OPEC sources have told Reuters no immediate action was planned and producers would discuss how to share a previously agreed output increase.