Oil Rises on Gabon Supply Fears, US Crude Inventories Draw
By Adedapo Adesanya
Oil prices gained on Wednesday as fresh supply worries came as oil-producing country, Gabon, was hit by a military coup while data showed tighter-than-expected crude supplies in the United States.
Brent crude futures rose by 37 cents to settle at $85.86 a barrel, while the US West Texas Intermediate (WTI) crude futures gained 47 cents to $81.63 per barrel.
Gabon, the smallest member of the Organisation of the Petroleum Exporting Countries (OPEC), with around 200,000 barrels per day of output, suffered a military takeover following an announcement that President Ali Bongo had won a third term in office of seven years.
The ousted Ali Bongo assumed power in Gabon in 2009, replacing his late father, who had served as President since 1967.
While oil production in the country has not been affected by the coup, prices ticked up early on Wednesday, partly on concerns about the potential for some supply loss.
Prices also found support after the US Energy Information Administration (EIA) reported an inventory decline of 10.6 million barrels for the week to August 25.
The estimate compared with a draw of 6.1 million barrels for the previous week.
A day earlier, the American Petroleum Institute (API) had estimated inventories had shed a massive 11.5 million barrels in the week to August 25, which prompted a spike in oil prices.
Hurricane Idalia contributed to the price rise with the potential for more evacuations in the Gulf of Mexico after Chevron suspended operations at three platforms.
Analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.
Based on that expectation, refining sources surveyed by Reuters forecast that Saudi Arabia’s official selling prices for all crude grades sold to Asia in October will be raised to their highest this year.
Despite production cuts from Saudi Arabia as well as Russia and others, market analysts said other exporters like Venezuela and Iran are filling some of the gaps.
Oil traders also shifted focus away from economic data from the US and China.
In China, the world’s biggest oil importer, refiners are poised to boost diesel exports in September to more than 1 million metric tons, drawn by lucrative margins from selling overseas and as they expect to receive more export quotas.