Oil Prices Higher on Low US Crude Inventories

Oil prices increased on Wednesday on a slip in US crude inventories and a weaker dollar, while concerns about a potential shortfall in Iranian supply from November due to US sanctions also propped up prices.

oil pump on top of oil barrels on top of dollar bills

Brent crude oil futures were at $72.90 per barrel, higher 27 cents, or 0.37 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were higher 27 cents, or 0.41 percent, trading at $66.11 per barrel.

US crude inventories slipped by 5.2 million barrels in the week that ended on August 17 to 405.6 million barrels, larger than analyst forecasts of a fall of 1.5 barrels, according to the data from industry group the American Petroleum Institute (API).

Official data from the US Energy Information Administration (EIA) is due later in the day on Wednesday.

“Investors are also confident that (official) inventories in the United States will decrease this week,” ANZ Bank stated in a note.

Signs of sluggish US crude output growth and a weaker US dollar also propped oil prices a bit, stated Kim Kwan-rae, who is a commodity analyst at Samsung Futures in Seoul.

The US dollar index, which tracks the greenback’s strength against a basket of six other major currencies, eased on Wednesday to 95.211 after dropping 0.7 percent during the previous day, weighed down by US President Trump’s comments on monetary policy.

A weaker US dollar makes the dollar-denominated oil less expensive for buyers holding other currencies.

The EIA slashed its 2018 US crude production growth forecast on August 7 to 10.68 million barrels per day from 10.79 milllion barrels per day amid lower crude prices.

Concerns also remain over how much oil will be removed from the global markets by the re-imposed sanctions on Iran, in spite of the worries that demand-growth could be weaker amid a trade spat between the United States and China, which happened to be the world’s two biggest economies.

“The Iran issue continues to occupy traders’ minds,” stated Greg McKenna, who is the chief market strategist at futures brokerage AxiTrader.

Iran, which is a member of the Organization of the Petroleum Exporting Countries (OPEC) and OPEC’s third-largest oil producer, stated earlier this week that no other OPEC member should be allowed to take over its share of oil exports.

Meanwhile, a Chinese trade delegation is currently in Washington to discuss the trade friction with the United States’ side. However, signs of resolutions were not likely as US President Donald Trump said in an interview that he did not expect much progress.

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