Brent nears $72 amid tightening supplies; surprise draw in USA crude stocks

Crude Oil

Brent nears $72 amid tightening supplies; surprise draw in USA crude stocks

Brent oil hit a 2019 high above $72 a barrel on Wednesday, propelled by steady economic growth in China and a fall in USA crude stocks which defied expectations and signalled firm demand, while global supply remained tight.

An unexpected fall in United States crude inventories also boosted oil prices.

Brent crude, the global benchmark, was down 12 cents at 71.06 dollars a barrel at 0801 GMT. U.S. West Texas Intermediate (WTI) crude futures gained 65 cents, or 1 percent, to settle at $64.05 a barrel.

Gasoline stockpiles fell by 3.6 million barrels, the API said, more than forecasts of a 2.1 million-barrel drop.

Global supply has been tightened further by USA sanctions on OPEC members Venezuela and Iran.

The U.S. drilling rig count, an indicator of future production, last week rose for a second week in a row.

Iran's crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.

"Global supply is falling faster than people think".

"Today's trade provided further evidence of a bull market beginning to show some wear and tear but also a market that doesn't appear to have achieved an interim price top", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Adding downward pressure, however, were concerns about Russia's willingness to stick with OPEC-led supply cuts and expectations of higher US inventories.

In June, OPEC and its partners will decide whether to extend their agreement, but Russia's willingness to stick with the cuts now looks less clear.

OPEC, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from January 1 for six months.

Russia's Finance Minister Anton Siluanov was quoted by the TASS news agency as saying on Saturday that Russian Federation and OPEC may decide to boost production to fight for market share with the United States but this would push oil prices as low as $40 per barrel.

"We have already seen these inventories going higher in the last week's print", said Naeem Aslam, Chief Market Analyst at TF Global Markets in London.

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