Crude prices climb with US inventory drop and export delays

SINGAPORE: Oil prices extended their gains for a second day on Wednesday after industry data pointed to a decline in US crude stocks, fuelling concerns about tightening supplies in the global market.

Brent crude futures were up 19 cents, or 0.3 percent, at $67.82 a barrel by 0400 GMT, while US West Texas Intermediate (WTI) rose 21 cents, also 0.3 percent, to $63.62. Both benchmarks had jumped by more than $1 a barrel on Tuesday as a deal to restart exports from Iraq’s Kurdistan region stalled.

Pipeline shipments to Turkey have been on hold since March 2023, and hopes of a breakthrough faded as key producers demanded repayment guarantees before resuming flows. The agreement, once finalised, would unlock about 230,000 barrels per day of exports.

Supply worries keep market on edge

Analysts say the oil market remains underpinned by supply risks, though upside remains limited by global economic concerns. “Prices are expected to remain supported but range-bound in the near term,” said Emril Jamil, senior oil analyst at LSEG. He noted that ongoing disruptions in Russian exports are keeping a floor under prices, while uncertainty over US Federal Reserve interest rate moves continues to cap strong rallies.

The latest data from the American Petroleum Institute showed US crude stocks dropped by 3.82 million barrels in the week ending September 19. Gasoline inventories also fell by 1.05 million barrels, while distillate supplies increased by about 518,000 barrels. Official government figures are due later on Wednesday and are expected to show a mixed picture, with gains in crude and gasoline stockpiles but a drop in distillates.

Venezuelan output adds another twist

Meanwhile, reports suggest supply could tighten further as Chevron will only be able to ship about half of the 240,000 barrels per day it produces in Venezuela with its partners. Although the company received authorisation in July to continue operating in the sanctioned country, new rules are likely to curb exports of the heavy, high-sulphur crude to the US.

With a mix of regional disputes, sanctions and economic uncertainty shaping the outlook, traders say the oil market is likely to stay volatile in the weeks ahead.

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