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World oil prices more than $1 on Wednesday, expanding overnight gains, after industry data indicated that oil stocks in the United States declined more than expected last week as a result of two storms, underscoring limited supply as demand improves. Prices were also maintained by a broad feeling of energy market constraints amid Europe’s power and gas crises, as several OPEC members struggled to increase output.
By 0911 GMT, US West Texas Intermediate (WTI) oil futures had gained $1.07, or 1.5 percent, to $71.56 per barrel, adding to a 35-cent gain on Tuesday. After gaining 44 cents on Tuesday, Brent crude futures rose $0.95, or 1.3 percent, to $75.31 a barrel. Following Monday’s pressure from broad market fears over the likely default of Chinese property developer China Evergrande Group, the oil market’s focus shifted to concerns over limited supplies.
“Crude is supported by the API weekly report, which noted a bigger-than-expected decline in U.S. crude oil stocks,” said Ravindra Rao, vice president of commodities at Kotak Securities.
“Prices are still range bound ahead of the EIA weekly report due later today and ahead of the U.S. Federal Reserve’s monetary policy decision … In the near term, crude may move with larger markets with focus on China and Fed policy.”
According to market sources, oil stockpiles in the United States declined by 6.1 million barrels for the week ending September 17, citing numbers released by the American Petroleum Institute on Tuesday. [API/S] This was a significantly larger drop than projected. The market will be looking for confirmation of the dips in government statistics from the United States on Wednesday. [EIA/S]
“Given the variety of supportive factors in the energy space, notably sky-high natural gas prices … dips in prices right now are likely to be short-lived,” said Jeffrey Halley, an analyst at brokerage OANDA.
Global gas prices are expected to break records this winter.