Brent gains on the back of declining US crude stocks

The front-month ICE Brent contract has gained by $1.27/bbl on the day, to trade at $67.65/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent’s price has moved higher after the American Petroleum Institute (API) reported a second consecutive weekly draw in US crude stocks.

US crude oil inventories dropped by 3.8 million bbls in the week ending 19 September, according to estimates from the API cited by Trading Economics.

A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.

Brent has gained further support from renewed geopolitical tensions after US President Donald Trump said Ukraine could regain territory lost to Russia with NATO's help, Reuters reported.

“This [Trump’s remarks] raised the spectre of Trump increasing pressure on Russia, including new sanctions on Moscow and the buyers of crude oil,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

Downward pressure:

OPEC’s second-largest oil producer Iraq has greenlighted a plan to resume pipeline exports of crude oil from its semi-autonomous Kurdistan region through Turkey, according to Reuters.

This tripartite deal between the Iraq’s federal government, the regional Kurdish government and a consortium of oil companies operating in Kurdistan could add at least 230,000 b/d of supplies to the global oil market, amid growing OPEC+ output.

The news has put some downward pressure on Brent, according to market analysts.

“Oil prices dropped after news that Kurdistan will restart pipeline exports,” Price Futures Group’s senior market analyst Phil Flynn said. “Baghdad, Erbil, and oil companies agreed to resume crude exports under federal control,” he added.

By Aparupa Mazumder

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