Oil prices rose on Wednesday, supported by reports of a drop in US commercial crude inventories and the loss of storage capacity in Libya, but under pressure ahead of a meeting of OPEC exporters which may increase global production.
Brent crude was up 50 cents at $75.58 a barrel in afternoon trade in London
US crude inventories fell by 3 million barrels to 430.6 million barrels in the week to June 15, according to an American Petroleum Institute report on Tuesday.
Traders said a drop in Libyan supplies due to the collapse of an estimated 400,000-barrel storage tank also helped push up prices.
Looming large over markets, however, were meetings scheduled on June 22-23 in Vienna of the OPEC countries with other big producers, including Russia.
“The run-up to this OPEC meeting is fraught with uncertainty with Iran from the onset adopting a very entrenched opposition to any supply increase,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum.
Jack Allardyce, research analyst at Cantor Fitzgerald Europe, expects OPEC to compromise and agree a fairly modest increase of 300,000-600,000 barrels per day in production, equivalent to about 0.5 percent of world production.
“We could see this knocking $5 per barrel off Brent,” Allardyce said.
Markets are also watching tension between the US and China, with both sides threatening to impose duties on each other’s exports, including US crude oil.
A 25 percent tariff on US crude oil imports, as threatened by China in retaliation for duties Washington has announced but not yet implemented against Chinese products, would make US crude uncompetitive in China versus other supplies.
