Oil up as US inventories decline

Oil prices rose steadily on Tuesday and Wednesday amid an outage in the North Sea and data showing that US commercial crude inventories fell by some 1.8 million barrels last week.

At 12:58 p.m. London time, Brent crude futures for June delivery were at USD 54.83 per barrel, up about 1.2% since Tuesday’s close.

The decline in US inventories, reported on Tuesday by the American Petroleum Institute, was considerably steeper than the 200,000-barrel dip forecast by analysts surveyed by the Wall Street Journal.

Oil prices were also supported by news that the UK’s Buzzard field in the North Sea, which produces some 180,000 bopd, was temporarily offline due to repairs at an onshore processing terminal. The development offset the partial recovery of Libya’s Sharara oilfield, which returned some 120,000 bopd to the market on Monday, according to Reuters.

“We believe the implemented production cuts will trigger a material drawdown in OECD oil inventories and thus higher crude oil prices,” UBS expert Giovanni Staunovo told the agency.

“We expect Brent oil prices to rise above USD 60 a barrel in three months.”

While analysts are closely watching rising production in the US and <a href=”https://theenergyyear.com/news/<a href=’https://theenergyyear.com/companies-institutions/opec/’>opec-fails-to-commit-to-extending-cut/”>the heated debates among major producers whether or not to extend the output curbs negotiated last year by a further six months, many predict that oil prices will remain relatively high in the near future.

“In the event of OPEC/non-OPEC not extending the cuts into the second half, the world would still continue to draw stocks at a mild pace of about 200,000 bopd until September, thereby lending support to prices one way or another,” JBC Energy analysts told Reuters.