Oil prices jump over 2%, hit $46.58 per barrel

22/09/2016 05:16 AST

Oil prices were up as much as 2 per cent on Wednesday, reacting to the possibility of another surprise weekly drop in US inventories amid an industry strike in Norway that threatened to cut North Sea crude output.

The American Petroleum Institute, a trade group, reported a 7.5 million barrel drop in US crude inventories for the week ended Sept.

16, versus a 3.4 million-barrel drop forecast by oil market analysts polled by Reuters. The US Energy Information Administration (EIA) will issue official inventory data for last week at 10:30 am EDT (1430 GMT). In Norway, more than 300 oil service workers went on strike as wage talks broke down, hitting operations of five large subcontractors to the domestic oil and gas industry.

Also supporting crude prices was speculation that Opec and oil producers will agree to some sort of a production-freeze deal in talks in Algeria next week, and that the Federal Reserve will not hike US interest rates in a policy decision due at 2:00pm.

Brent crude futures were up 70 cents, or 1.6 per cent, at $46.58 per barrel by 9:43 am. West Texas Intermediate (WTI) crude futures rose 95 cents, or 2.1 per cent, to $45. “The API is causing a bullish stir as it reported a 7.5 million crude oil drawdown,” Phil Flynn, analyst at brokerage Price Futures Group in Chicago, wrote in a market commentary.”If the EIA confirms (the data), that means U.S.

oil supply has fallen close to 21 million barrels over the last three weeks.” Crude prices have swung lately as traders weighed surging production from OPEC and other major producers such as Russia, versus falling stockpiles in the United States, the world’s largest oil consumer.

Russian President Vladimir Putin on Wednesday ordered the start of production at a new oilfield that would add about 12,000 barrels per day in output, after daily oil production reportedly hit record highs of 11.75 million barrels.

Opec’s biggest exporters such as Saudi Arabia, Iran, Iraq, Nigeria and Libya have also raised, or been trying to hike output in recent months.

The Gulf Today