LONDON: Brent crude traded near a two-month high as shrinking oil inventories pointed to an increasingly tight global market.
Futures in London were up 0.5% after surging 2.2% on Tuesday. Industry data showed US inventories slid 8.64 million barrels last week. The US government cut its outlook for oil production due to pipeline bottlenecks. Meanwhile, Hurricane Florence threatens to disrupt fuel supplies as it moves toward North Carolina.
Impending US sanctions on Iran have started forcing buyers to shun imports from the Islamic republic before a November deadline. With frequent attacks on Libya’s production and falling output in Venezuela, traders are weighing whether the Organization of Petroleum Exporting Countries and its allies, as well as the US, will be able to make up the shortfall.
“The oil price is being given a boost by the API’s report, which shows that US crude oil stocks fell sharply,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for October delivery rose as much as US$1.31 to US$70.16 a barrel on the New York Mercantile Exchange and traded at US$70.05 a barrel as of 1.44pm London time. The contract climbed 2.5%, or US$1.71, to US$69.25 on Tuesday. Total volume traded was about 33% above the 100-day average.
Brent for November settlement rose 38 cents to US$79.44 on the ICE Futures Europe exchange after a 2.2% advance on Tuesday. The global benchmark traded at a US$9.63 premium to WTI for the same month.