SINGAPORE: Oil prices rose on Wednesday, lifted by a reported fall in US crude inventories and by the ongoing risk of supply disruptions.
Brent crude oil futures were at $72.17 per barrel at 0539 GMT, up 59 cents, or 0.8 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 59 cents, or 0.9 percent, at $67.11 a barrel.
In the United States, crude inventories fell by 1 million barrels last week, to 428 million barrels, according to a weekly report by the American Petroleum Institute (API) on Tuesday.
Official weekly US data will be published by the Energy Information Administration (EIA) on Wednesday.
Outside the United States, oil markets have been receiving general support due to a sense that there were high risks of supply disruptions, including a potentially spreading conflict in the Middle East, renewed US sanctions against Iran and falling output as a result of political and economic crisis in Venezuela.
“Oil prices are holding near three-year highs (reached earlier in April) for the time being, and with inventories back in line with normal levels, the supply glut of the last few years appears to be over,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
Beyond voluntary supply restriction aimed at propping up prices led by the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) since 2017, O’Loughlin said falling output in Venezuela due to its political and economic turmoil was supporting prices.
“OPEC production is currently lower than expected as a result of large declines in Venezuelan output caused by a deterioration in the economic situation there,” he said.
The lower OPEC supplies come as demand is healthy, with China’s refineries processing a record 12.1 million barrels per day (bpd) of crude oil in March.
Dutch bank ING said in a note to clients that Brent had risen back above $70 per barrel in April “due to geopolitical risks along with some fundamentally bullish developments in the market.”
It raised its average 2018 price forecast for Brent to $66.50 a barrel from $60.25, and its 2018 WTI forecast to $62.50 per barrel from $57.75.
For next year, however, ING expects lower prices due to rising US crude output, which has jumped by a quarter since mid-2016 to over 10.5 million bpd.
The structure of the Brent and WTI forward price curve also points to a tighter market this year than in 2019.
The premium for June 2018 over June 2019 prices for Brent and WTI is $5.5 and $6 per barrel respectively, creating a market structure known as backwardation in which it is attractive to sell crude immediately instead of keeping it in storage for later sale.
Oil prices rise on lower US crude inventories, global supply risks
Oil prices rise on lower US crude inventories, global supply risks
- In the United States, crude inventories fell by 1 million barrels last week to 428 million barrels
- For next year, ING expects lower prices due to rising US crude output
Saudi Arabia, Syria sign deal to launch 45 development initiatives
RIYADH: Saudi Arabia and Syria signed a framework agreement to launch 45 development initiatives, expanding economic cooperation as the two countries step up efforts to rebuild Syria’s economy.
The deals, signed in Damascus between the Syrian Development Fund and the Saudi Development Committee, cover several sectors and are aimed at reviving economic activity, improving regional connectivity and attracting foreign investment, Syria’s state news agency SANA reported.
The agreements were signed during a visit by a Saudi investment delegation led by Investment Minister Khalid Al-Falih, who said a separate real estate project was also agreed under the Saudi-Syrian Business Council.
Saudi Arabia and Syria have been strengthening economic ties, with recent agreements focusing on investments in aviation, telecommunications, infrastructure and real estate.
During the delegation’s visit to Syria, Saudi Arabia also announced a $1 billion investment in the country’s telecoms sector, including the SilkLink project aimed at enhancing digital connectivity.
Al-Falih said the telecommunications project will be led by stc, Saudi Arabia’s largest telecom operator.
Saudi carrier flynas also signed an agreement with the Syrian General Authority of Civil Aviation to establish a new commercial airline under the name “flynas Syria.”
The new carrier will be a joint venture, with 51 percent ownership held by the Syrian General Authority of Civil Aviation and Air Transport and 49 percent by flynas. Operations are expected to commence in the fourth quarter of this year.
The airline will operate flights to destinations across the Middle East, Africa and Europe, aimed at bolstering air traffic to and from Syria, enhancing regional and international connectivity, and meeting growing demand for air travel.
“This partnership enhances economic integration and market connectivity, and supports development goals by advancing air transport infrastructure, ultimately serving the mutual interests of both nations and promoting regional economic stability,” Al-Falih said in a statement.
He added that Saudi Arabia would also invest SR7.5 billion ($2 billion) to develop two airports in Aleppo over several phases.
The minister also announced the launch of the Elaf Investment Fund to finance major projects in Syria, and said banking transfer channels between the two nations had been reactivated following the lifting of economic sanctions.
