U.S. oil prices surge as inventory draw adds to supply concerns

By Jessica Resnick-Ault NEW YORK (Reuters) - U.S. oil futures surged nearly 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over U.S.

Reuters September 20, 2018 02:05:13 IST
U.S. oil prices surge as inventory draw adds to supply concerns

US oil prices surge as inventory draw adds to supply concerns

By Jessica Resnick-Ault

NEW YORK (Reuters) - U.S. oil futures surged nearly 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over U.S. sanctions on Iran that come into force in November.

U.S. crude inventories fell 2.1 million barrels last week to 394.1 million barrels, the lowest level since February 2015, government data showed. Gasoline stocks fell 1.7 million barrels versus forecasts for a 100,000-barrel drop.

"It was a squarely bullish report," said John Kilduff, a partner at Again Capital Management in New York. "The summer-like demand from drivers is proving unrelenting."

Gasoline consumption usually picks up in the summer and wanes in autumn, but demand remained strong in the latest week, estimated at 9.5 million barrels per day.

U.S. crude futures settled up $1.27, or 1.8 percent, at $71.12 a barrel.

Brent futures also rose but the gains were more muted, as the global benchmark ended 37 cents, or 0.5 percent, higher at $79.40 a barrel.

In the previous session, Brent rose 1.3 percent on a media report that Saudi Arabia, the world's largest oil exporter, was comfortable with prices above $80, indicating the producer would not try to increase output to drive prices lower.

Reuters reported on Sept. 5 that Saudi Arabia wanted oil to stay between $70 and $80 to keep a balance between maximising revenue and keeping a lid on prices until U.S. congressional elections.

The Organization of the Petroleum Exporting Countries and other producers including Russia meet on Sept. 23 in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.

U.S. sanctions affecting Iran's oil exports come into force on Nov. 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.

(Additional reporting by Meng Meng and Aizhu Chen in Beijing; Editing by Marguerita Choy and Edmund Blair)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.