Oil prices rise due to supply problems

  • U.S. crude inventories fell 1.3 million barrels last week – API data
  • US to sell 15 million barrels of oil from its reserves in December – official

SINGAPORE, Oct 19 (Reuters) – Oil prices rose at the start of Asian trade on Wednesday, paring losses from the previous session, on concerns about a supply crunch following reports of falling inventories in the United States offsetting fears of a drop in demand from the main oil importer, China.

Brent crude futures rose 73 cents, or 0.8%, to $90.76 a barrel at 0100 GMT. U.S. West Texas Intermediate crude was at $83.95 a barrel, up $1.13 or 1.4%. WTI’s first month contract expires on Thursday.

Brent and WTI hit two-week lows and fell 1.7% and 3.1%, respectively, in the previous session on reports of US President Joe Biden’s plans to release more barrels the Strategic Petroleum Reserve (SPR) and concerns about declining Chinese demand for fuel.

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U.S. crude oil inventories fell about 1.3 million barrels for the week ended Oct. 14, market sources said, citing figures from the American Petroleum Institute on Tuesday.

U.S. crude inventories are expected to have risen for a second straight week, rising 1.4 million barrels in the week to Oct. 14, according to an extended Reuters poll on Tuesday.

Inventory data from the Energy Information Administration, the statistical arm of the US Department of Energy, is due at 10:30 a.m. (1430 GMT) on Wednesday.

Oil prices were also supported by improved risk sentiment which was bolstered by upbeat US corporate earnings and a pause in soaring bond yields, CMC Markets analyst Tina Teng said. Read more

“As a result, the sell-off caused by fear of recession in oil markets has eased,” Teng added.

Earlier in October, OPEC+ – which includes the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia – agreed to a steep oil production cut of 2 million barrels per year. day.

Following White House accusations that Saudi Arabia coerced some countries into backing the move, OPEC’s secretary general said on Tuesday that the group of oil producers’ decision was unanimous. Read more

The OPEC+ production cut, which comes ahead of a European Union embargo on Russian oil, will squeeze supply in an already tight market. European Union sanctions on Russian crude oil and petroleum products will come into effect in December and February respectively.

“We expect Russian production to decline by 0.6 million barrels per day by the end of the year (on top of the 400,000 barrels per day decline since February), while Europe is implementing both its embargo on Russian oil purchases as well as a ban on crucial services like shipping, insurance and financing,” JP Morgan analysts said in a note.

To close the gap, the Biden administration plans to release more oil from the SPR to ease fuel prices ahead of next month’s congressional elections. Read more

In December, the administration plans to sell 15 million barrels of oil from its reserves, the rest of the 180 million barrels announced earlier this year, a senior U.S. official said.

“The price at the pump is an important weekly reminder for the consumer and energy traders should not be surprised if Biden continues to be aggressive in exploiting the SPR,” analysts at ANZ Research said in a note.

In Europe, EU emergency oil stocks, including crude oil and petroleum products, recovered slightly in July after two coordinated releases brought levels back to a record high in June, but were still lower down 3.7% from those in July 2021, the bloc’s statistics office said. Tuesday. Read more

Oil price gains were capped by fears of lower fuel demand from China as it persists in its strict zero COVID policy.

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Reporting by Isabel Kua; Editing by Ana Nicolaci da Costa

Our standards: The Thomson Reuters Trust Principles.

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