Oil rises on U.S. crude draw, Iraqi supply risks

30 Mar Oil rises on U.S. crude draw, Iraqi supply risks

Oil prices rose on Thursday as a surprise drop in U.S. crude stockpiles and a halt in exports from Iraq’s Kurdistan region offset a smaller-than-expected cut to Russian supplies.

Brent crude futures rose 40 cents, or 0.51%, to $78.68 a barrel at 0926 GMT, while West Texas Intermediate crude rose 52 cents, or 0.71%, to $73.49 a barrel.

U.S. crude oil stockpiles fell unexpectedly in the week to March 24 to a two-year low, the Energy Information Administration said on Wednesday.

The 7.5 million-barrel drop in crude inventories compared with analysts’ expectations in a Reuters poll for a 100,000-barrel rise.

Further support came as exports from Iraq’s northern region remain halted.

Producers have shut in or reduced output at several oilfields in the semi-autonomous Kurdistan region of northern Iraq following a halt to the northern export pipeline, with more outages on the horizon, company statements showed.

But the Kurdistan-Iraq premium in oil prices could vanish sooner than expected, analysts from Citi said Thursday.

The “changes in Iraq’s domestic politics may lead to a durable political settlement very soon”, said Citi, estimating that pipeline flows could grow by some 200,000 barrels per day (bpd).

These factors offset bearish sentiment following a lower-than-expected cut to Russian crude oil production in the first three weeks of March.

The 300,000 bpd production decline compared with targeted cuts of 500,000 bpd, or around 5% of Russian output, sources familiar with the data told Reuters.