Why are crude oil prices climbing on Wednesday?

[Leon Mathias]

[Ignatius Bose]

Crude oil prices are rising on Wednesday after the American Petroleum Institute (API) reported late on Tuesday that US crude oil supplies fell by 7.5 million barrels for the week ending 21st June. Additionally, the API said that the US stockpile of petrol fell by 3.2 million barrels while inventories of distillates surged by 160,000 barrels.

At 1pm GMT on Wednesday, the benchmark Brent August futures (BRNQ19) and its American counterpart, West Texas Intermediate (WTI) for August shipments (CLQ19) were gaining by 1.3% and 1.9% respectively.

The API generally announces the crude oil inventory data ahead of the Energy Information Administration (EIA), which is due to publish its data later today. According to a survey conducted by S&P Global Platts, the EIA is expected to show a 2.8 million barrels fall in crude inventories last week, about a third lower than the one put out by the API. In the meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) who were due to meet on 25th-26th June to discuss ongoing supply cuts have now decided to hold off until 1st-2nd July.

Crude is likely to find support from the mounting tensions between the United States and Iran and the supply glitch following Washington’s sanctions on Iranian oil.