Crude oil prices rose for a second day Wednesday after data showed United States crude inventories fell more than expected, easing worries about oversupply that have dogged the oil market in recent weeks.
Following the drop in the US inventories, the global benchmark Brent crude rose by 40 cents, or 0.55 per cent, from 73.43 per barrel to $73.84 per barrel, after gaining 0.5 per cent on Tuesday.
The US West Texas Intermediate (WTI) crude also rose by 20 cents, from 68.52 to $68.72, having risen nearly one per cent in the previous session.
US crude and fuel stockpiles fell more than expected last week, the American Petroleum Institute (API) reported late on Tuesday.
The country’s inventories fell 3.2 million barrels in the week to July 20 to 407.6 million barrels, compared with the projected decrease of 2.3 million barrels.
Crude stocks at the Cushing, Oklahoma, the country’s delivery hub, fell by 808,000 barrels.
The publication of the official figures from the US Department of Energy’s Energy Information Administration was being expected Wednesday.
Reuters reported that oil prices have come under pressure this month as a trade dispute between the US and China, as well as other major economic blocs has raised the possibility of slower economic growth and weaker global energy demand as higher tariffs stifle imports.
But the global economy is still growing strongly and it is not clear how the trade dispute may impact business.
Reports that China will increase infrastructure spending have also helped reduce concerns that US-China trade tensions would dent Chinese demand for oil.
Crude price had hit $80 per barrel this year before it dropped to this level.
But the production disruptions in Norway, Libya and other producing countries added to supply worries and led to the rise in crude price.
Venezuela’s production collapsed due to a lack of investment and Iranian exports have suffered due to US sanctions.
The Organisation of Petroleum Exporting Countries (OPEC) has little capacity to fill the gap as demand for oil quickens.
Libya’s national oil production fell following recent oil port closures.
The United States said it wanted to reduce oil exports from Iran, the world’s fifth-biggest producer, to zero by November, which would oblige other big producers to pump more.
President Donald Trump said in May that he would pull the US out of an international accord under which Tehran had agreed to limit its nuclear development in exchange for sanctions relief.
Trump said he would reintroduce sanctions and Washington later told some countries that they must stop buying Iran’s oil from November 4 or face financial consequences.
To reduce a global supply overhang that dogged oil markets since 2014, OPEC, together with Russia and a group of other producers, embarked on output cuts that removed 1.8 million barrels per day from the global market.
The cartel had at their November 30, 2017 meeting agreed to extend the oil output cuts until the end of 2018 as part of the global efforts to eliminate excess oil supply in the international market.
But following concerns raised by President Trump that OPEC was causing price hike, the cartel and Russia have resolved to pump one million barrels per day into the market.
