Oil rises for the fifth session as stockpiles fall
LONDON: Oil prices rose for a fifth day on Wednesday, supported by a drop in US inventories and investor expectations that the US Federal Reserve will lower borrowing costs for the first time since the financial crisis more than a decade ago.
Brent crude futures LCOC1, the international benchmark for oil prices, were up 40 cents, or 0.6 per cent, at $65.12 a barrel by 0842 GMT.
US West Texas Intermediate crude CLC1 gained 20 cents, or 0.3 per cent, to $58.25 a barrel.
Central bankers in the United States began their two-day meeting on Tuesday and were expected to cut interest rates, with President Donald Trump having reiterated his call for the Fed to make a large cut.
“The move has long been anticipated and represents a double boon for oil prices — on one hand it should encourage US oil demand and on the other it will apply downward pressure on the dollar,” said PVM Oil Associates analyst Stephen Brennock.
Oil stockpiles fell again last week, along with gasoline and distillate inventories, data from the American Petroleum Institute industry group showed on Tuesday. Crude inventories fell by 6 million barrels to 443 million barrels in the week ended July 26, against a forecast for a drop of 2.6 million barrels in a Reuters poll of analysts.
“The outlook for another draw in US crude inventories and renewed outages in Libya is supporting oil prices,” said UBS oil analyst Giovanni Staunovo.
Libya’s Sharara oilfield, the country’s largest, shut down on Tuesday after a problem with a valve on the pipeline linking it to the Zawiya oil terminal.
Tensions in the Middle East remain high, providing another bullish catalyst for prices, with the US formally asking Germany to join France and Britain to help to secure the Strait of Hormuz after the seizure of a British tanker by Iran. Germany has expressed scepticism about the request.
BP finance chief Brian Gilvary said the British company has not taken any of its oil tankers through the Strait of Hormuz since a July 10 attempt by Iran to seize one of its vessels. Market participants are also closely watching the Uschina meeting in Shanghai as both countries seek to end a year-long trade war, though expectations are low for progress after combative remarks from President Trump.