Oil Rises as Report Shows US Stockpiles Drop
Oil rose for a second day after an industry report showed another drop in US inventories.
Brent rose above $77 a barrel, after rising 1% on Tuesday, while West Texas Intermediate traded near $75 a barrel. A report by the American Petroleum Institute showed US stockpiles fell by 4 million barrels last week, which would be the seventh straight decline and the longest decline in three years if confirmed by government data on Wednesday.
Oil pushed higher on Tuesday, reversing earlier losses as cold weather in the US boosted demand for heating fuel and raised the risk of freezing in production areas, while northern Europe also braced for snow and ice. Futures started 2025 strongly on the back of technical buying after prices broke through a months-long range, although many analysts continue to warn of a supply glut later in the year and technical indicators suggest the rally may have gone too far.
“The cold front in the U.S. and Europe is pushing crude higher, with some support from concerns over the loss of Iranian barrels if the Trump administration tightens sanctions,” said Vandana Hari, founder of Vanda Insights in Singapore. “Nevertheless, crude looks overbought. Crude may be generating profit-taking, although that may require a reminder of the global economic headwinds.” In a sign of tightening supplies, Russian data showed its oil output fell below its OPEC+ output target last month, after seaborne exports fell to the lowest since August 2023.
Meanwhile, ports in eastern China’s Shandong province, a major destination for Iranian crude, are scrambling to prevent tankers subject to U.S. sanctions from docking at their berths. Stocks at Cushing, the delivery point for WTI, fell by 3.1 million barrels, the API said, which would take them to their lowest level since 2014 if confirmed.
Source: Bloomberg
