Oil prices rise amid drop in US crude inventories

Oil prices rose on Wednesday after industry data showed a large drop in crude inventories of the United States, the world’s top oil consumer.

Brent crude oil futures, global oil benchmark, rose by 1.84 percent to $75.73 a barrel by 2:58 pm on Wednesday, while U.S. West Texas Intermediate (WTI) crude oil futures witnessed a corresponding increase of 1.87 percent to $71.81 a barrel.

Ahead of the official Energy Information Administration (EIA) report, the American Petroleum Institute (API), an industry group, reported late Tuesday that U.S. crude supplies fell by 6.1 million barrels for the week ended September 17.

This number is said to be significantly more than expected.

Reports that some OPEC members struggled to raise output and a general sense of energy market shortages amid a power and gas crisis in Europe added additional support to crude oil prices.

“Crude is supported by the API weekly report, which noted a bigger-than-expected decline in U.S. crude oil stocks,” Ravindra Rao, vice president of commodities at Kotak Securities told Reuters.

“Prices are still rangebound ahead of the EIA weekly report due later today and ahead of the U.S. Federal Reserve’s monetary policy decision … In the near term, crude may move with larger markets with a focus on China and Fed policy,” Rao said.

On Wednesday, the senate approved $57 per barrel as the oil benchmark for the 2022 budget.

In June, Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), had said rising crude oil prices will cause problems for resource-dependent countries such as Nigeria.

He lamented that oil prices had started exiting the comfort zone set by the NNPC and becoming a burden for the country.