Oil prices rose marginally on Thursday on mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a United States refinery.
Brent crude rose 59 cents, representing 0.6 per cent, to $101.81 a barrel, while US West Texas Intermediate crude was also up 42 cents, representing 0.4 percent, to $95.31 a barrel.
Both crude oil benchmark contracts touched three-week highs on Wednesday after the Saudi energy minister flagged the possibility that the Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, will cut production to support prices.
This comes at the time discussions on an agreement on Iran’s nuclear programme remain stalled, calling into question any resumption of its exports.
“Brent crude oil prices rebounded above the $100/barrel mark following Saudi officials showing willingness to defend prices via an OPEC+ production cut if necessary,” OPEC sources stated.
However, there is still uncertainty ahead for OPEC+ to justify an output reduction amid ongoing negotiations around the Iranian nuclear deal, and a deteriorating macroeconomic picture as the energy crunch gets worse.
In the United States, the world’s biggest oil consumer, an oil industry company, BP, reported shutting some units in Whiting, Indiana refinery after an electrical fire on Wednesday. The 430,000 barrel-per-day plant is a key supplier of fuels to the central US and the city of Chicago.
Talks between the European Union, the US and Iran to revive the 2015 nuclear deal are continuing with Iran saying it has received a response from the United States to the EU’s final text to resurrect the agreement.
OPEC sources moreover noted that any cut by OPEC+ is likely to coincide with a return of Iranian oil to the market, should Tehran secure a nuclear deal with world powers.
Falling US crude and product stockpiles also added to the upward pressure on prices as oil inventories fell by 3.3 million barrels in the week to Aug 19 at 421.7 million barrels, steeper from analysts’ expectations in a Reuters poll for a 933,000-barrel drop.
The bullish impact was countered by a drawdown in gasoline inventories that was less than expected, reflecting tepid demand.
US gasoline stocks fell by 27,000 barrels in the week to 215.6m barrels, compared with earlier expectations for a 1.5m-barrel drop.
Overall US gasoline demand sunk in the most recent period, leaving the four-week average of daily gasoline product supplied 7pc below the year-earlier period.
Oil production was hugely hit by the Russian invasion of Ukraine. This sent the oil price to stratospheric levels and this is being passed over to consumers at the pump.
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