SINGAPORE, Aug. 25: Oil prices rose on Thursday as concerns about tighter supply intensified amid disruptions to Russian exports, possible output cuts by major producers and partial shutdowns of U.S. refineries.
Brent crude was up 59 cents, or 0.6%, at $101.81 a barrel by 0400 GMT, while U.S. West Texas Intermediate was up 42 cents, or 0.4%, at $95.31 a barrel.
Both crude benchmark contracts hit three-week highs on Wednesday after Saudi Arabia’s energy minister said OPEC and its ally OPEC+ could cut output to support prices.
In addition, discussions on a deal on Iran’s nuclear program remain stalled, raising questions about any resumption of its exports. “Brent rebounded above $100 a barrel after Saudi officials expressed willingness to defend prices with OPEC+ production cuts if necessary,” Citi analysts said in a note.
However, Citi analysts added that amid ongoing talks over the Iran nuclear deal and a worsening macroeconomic picture as the energy crunch deepens, uncertainty remains for OPEC+ to justify production cuts.
In the United States, the world’s largest oil consumer, BP reported shutting down some units at its Whiting, Indiana, refinery following an electrical fire on Wednesday. The 430,000-barrel-per-day plant is a major fuel supplier in the central U.S. and the city of Chicago.
Negotiations continue between the European Union, the United States and Iran to revive the 2015 nuclear deal, with Iran saying it had received a response from the United States to the EU’s “final” text to revive the deal.
Any OPEC+ production cuts could coincide with the return of Iranian oil to the market if Tehran reaches a nuclear deal with world powers, OPEC sources told Reuters.
Declining U.S. crude oil and product inventories also added upward pressure on prices. Oil inventories fell by 3.3 million barrels in the week to Aug. 19 to 421.7 million barrels, beating analysts’ expectations for a 933,000-barrel drop in a Reuters poll.
Gasoline inventories fell less than expected, reflecting tepid demand, offsetting the bullish impact.
U.S. gasoline inventories fell 27,000 barrels this week to 215.6 million barrels, compared with expectations for a drop of 1.5 million barrels.
Overall gasoline demand in the U.S. has declined in recent times, leaving the 4-week average daily gasoline product supply 7% lower than a year earlier.
