An aerial view of the Phillips 66 oil refinery in the United States.
Tayfun Coskun | Anadolu Agency | Getty Images
Oil prices rose in early trading on Wednesday after industry data showed U.S. crude inventories fell more sharply than expected last week, pointing to tighter supply ahead of an impending oil ban. European Union and the G7 Price Cap on Russian Oil.
Crude Brent futures gained 25 cents, or 0.3%, to $88.61 a barrel at 0101 GMT, while US Crude West Texas Intermediate (WTI) futures rose 35 cents, or 0.4%, to $81.30 a barrel.
Both benchmark contracts were up around 1% in the previous session, with the United Arab Emirates, Kuwait, Iraq and Algeria reinforcing comments by the Saudi energy minister that the Organization of oil-exporting countries (OPEC) and its allies, together called OPEC+, did not plan to increase oil production. OPEC+ will then meet to consider the results on December 4.
Uncertainty over how Russia will react to plans by the Group of Seven (G7) countries to cap Russian oil prices further buoyed the market, analysts said.
The price cap, which has yet to be announced but is expected to be in place from December 5, will likely be adjusted a few times a year, a senior US Treasury official said on Tuesday.
“Traders are watching Russian exports closely and will look to the extent to which they might reduce the country’s overseas sales in retaliation, which could be a bullish boost for oil prices,” said Stephen Innes, partner. director of SPI Asset Management, in a note to clients.
Rising on Wednesday, U.S. crude inventories fell about 4.8 million barrels for the week ended Nov. 18, according to data from the American Petroleum Institute, market sources said.
Analysts polled by Reuters on average had expected a drop of 1.1 million barrels in crude inventories.
However, on a bearish note, API data showed distillate inventories, which include fuel oil and jet fuel, rose by around 1.1 million barrels compared to analysts’ expectations for a decline in 600,000 barrels.