Oil prices rose on Thursday on mounting supply tightness concerns amid disruptions to Russian exports, the potential for major producers to cut output, and the partial shutdown of a US refinery.
Brent crude rose 59 cents, or 0.6%, to $101.81 a barrel by 0400 GMT, while US West Texas Intermediate crude was up 42 cents, or 0.4%, at $95.31 a barrel, Reuters reported.
Both crude oil benchmark contracts touched three-week highs on Wednesday after the Saudi energy minister flagged the possibility that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will cut production to support prices.
Also, discussions on an agreement on Iran’s nuclear program remain stalled, calling into question any resumption of its exports.
“Brent crude oil prices rebounded above the $100/barrel mark following Saudi officials showing willingness to defend prices via an OPEC+ production cut if necessary,” Citi analysts said in a note.
However, there is still uncertainty ahead for OPEC+ to justify an output reduction amid ongoing negotiations around the Iranian nuclear deal, and a deteriorating macroeconomic picture as the energy crunch gets worse, the Citi analysts added.
In the United States, the world’s biggest oil consumer, BP reported shutting some units its Whiting, Indiana, refinery after an electrical fire on Wednesday. The 430,000 barrel-per-day plant is a key supplier of fuels to the central US and the city of Chicago.
Talks between the European Union, the US and Iran to revive the 2015 nuclear deal are continuing with Iran saying it had received a response from the United States to the EU’s “final” text to resurrect the agreement.
OPEC sources told Reuters that any cuts by OPEC+ are likely to coincide with a return of Iranian oil to the market, should Tehran secure a nuclear deal with world powers.
Falling US crude and product stockpiles also added to the upward pressure on prices. Oil inventories fell by 3.3 million barrels in the week to Aug. 19 at 421.7 million barrels, steeper from analysts’ expectations in a Reuters poll for a 933,000-barrel drop.
The bullish impact was countered by a drawdown in gasoline inventories that was less than expected, reflecting tepid demand.
US gasoline stocks fell by 27,000 barrels in the week to 215.6 million barrels, compared with earlier expectations for a 1.5 million-barrel drop.
Overall US gasoline demand sunk in the most recent period, leaving the four-week average of daily gasoline product supplied 7% below the year-earlier period.