By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices jumped on Wednesday as plunging U.S. crude stockpiles compounded supply worries in a market already uncertain about Libyan exports, a production disruption in Canada and Washington's demands that importers stop buying Iranian crude from November.
Little spare capacity remains to offset any further production disruptions, said John Kilduff, a partner at Again Capital Management.
"The bulls will run the table and are going to be helped out by random events that will come out of left field and keep this thing going," Kilduff said.
U.S. crude futures
Both contracts pared gains in post-settlement trade. U.S. crude was up $1.77 at $72.30 a barrel and Brent trading up 90 cents at $77.21 a barrel by 3:51 p.m. EDT (1951 GMT).
Because prices gained sharply for two straight sessions, some long positions were exiting the market to capitalize on the move as the end of the quarter approaches, said Tariq Zahir, managing member of Tyche Capital in Laurel Hollow, New York.
U.S. crude stocks fell nearly 10 million barrels last week, the most since Sept. 2016, while gasoline and distillate inventories rose less than expected, the Energy Information Administration said. [EIA/S]
Crude stocks at the Cushing, Oklahoma, delivery hub for the NYMEX futures contract fell 2.7 million barrels, EIA said.
"Cushing is a whopper," said Bob Yawger, director of energy futures at Mizuho.
The reported Cushing draw reflected just one day of a production disruption at a supplier in Canada. Syncrude's oil sands facility was offline at least through July, after a power outage last week locked in 350,000 bpd.
"Next week, you’re going to have a Cushing storage number that includes seven days of the Syncude outage. The math there would imply that you’d get an even bigger draw than this week," Yawger said.
The front-month U.S. crude contract traded at $4.67 above the sixth-month contract
The fall in Canadian exports helped drain supplies of heavy crude across North America, analysts said. They also cited concern about the risk of a disruption to supplies from Africa and the Middle East.
In Libya, a power struggle has left it unclear whether the internationally recognized government or rebels will handle oil exports. The future of Iranian crude exports was also in doubt. The United States has told all countries to stop importing Iranian oil from November.
Trying to make up for disrupted supply, the Organization of the Petroleum Exporting Countries said last week it would increase output.
Saudi Arabia plans to pump a record 11 million bpd in July, up from 10.8 million bpd in June, an industry source familiar with Saudi plans told Reuters on Tuesday.
Despite widespread international opposition to the U.S. stance on Iran, analysts expect a significant reduction in exports from OPEC's third biggest producer, perhaps in excess of 1 million bpd.
Iran pumped 3.8 million bpd in May, Reuters' monthly survey showed [OPEC/O].
Goldman Sachs said the planned unilateral U.S. sanctions against Iran would likely have a "high level of efficiency."
Risk consultancy Eurasia Group said: "We are increasing our estimate of oil likely to come off the market by November to about 700,000 bpd — another bullish factor for prices."
(Additional reporting by Henning Gloystein in Singapore, Christopher Johnson in London and Ayenat Mersie in New York; Editing by David Gregorio and Marguerita Choy)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Updated Date: Jun 28, 2018 07:05:26 IST