AMSTERDAM: Brent oil prices rose to a three-week high on Wednesday as weekly US crude inventories are expected to have fallen steeply and geopolitical tensions around oil-rich Iraq and Iran raised risk premiums.
International benchmark Brent crude futures traded 54 cents higher at $58.42 a barrel at 1242 GMT, just after reaching their highest level in three weeks at $58.49 a barrel.
US West Texas Intermediate (WTI) crude futures traded at $52.09 a barrel, up 21 cents on the day.
Weekly US crude inventories fell by 7.1 million barrels in the week to Oct. 13 to 461.4 million barrels, the American Petroleum Institute (API) said late on Tuesday.
Official US fuel inventory data is due later on Wednesday from the government's Energy Information Administration.
"There are market expectations for a bullish EIA inventory report this afternoon so Brent is heading towards $60 a barrel again," said Hans van Cleef, senior energy economist at ABN Amro.
Oil market investors were also closely following developments in the Middle East, where tensions in northern Iraq were threatening to disrupt oil flows.
Iraqi government forces captured the major Kurdish-held oil city of Kirkuk earlier this week, responding to a Kurdish independence referendum.
Oil flows through the 600,000 barrel-per-day (bpd) Kurdish pipeline to the Turkish port of Ceyhan have dropped off sharply to around 225,000 bpd, a shipping source told Reuters.
"It remains to be seen whether the Kurds, after withdrawing from the region they claim to be entitled to, will allow crude oil to be transported by pipeline across their territory to the Turkish Mediterranean port of Ceyhan," said analysts at Commerzbank.
Iraq's oil minister said it had asked oil major BP to develop the Kirkuk oilfields, but the company said it was in no rush to return to the area until security improves.
BP CEO Bob Dudley said no work has been done at Kirkuk since 2015 when Kurdish forces took control of the fields and ramped up operations to export more oil towards the Turkish Mediterranean port of Ceyhan.
The Iraq crisis adds to a looming dispute between the US and Iran. US President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.
During the previous round of sanctions against Iran, some 1 million barrels per day of oil was cut from global markets.
A technical pattern known as a "Golden Cross" was approaching in WTI crude oil contracts on Wednesday, in which the 50-day moving average climbs higher than the 200-day. This is widely seen as a bullish price indicator, and already occurred with Brent futures on Sept. 25.
Comments
Comments are closed for this article.