Oil futures climbed on Wednesday to end at their highest level in nearly seven weeks. A surprise weekly decline in U.S. crude inventories has added further support to prices, which had already been bolstered by renewed geopolitical risk to global output.
Prices had posted a sharp return as Saudi Crown Prince Mohammed bin Salman’s meeting with President Donald Trump in Washington raised the specter of a harder U.S. line against Iran and amid continuing concerns over declines in Venezuelan production.
Crude Oil Futures for May delivery were trading at $65.27 a barrel in Asia, up 0.15%. Brent Oil Futures for May delivery, traded in London, were up 0.07% at $69.52 per barrel.
Some support for crude futures came from currency markets, where the dollar fell as Federal Reserve officials stuck to their view of three rate increases for 2018, even as they delivered an expected quarter-point rate hike.
In oil markets, U.S. crude inventories fell 2.6 million barrels in the week to March 16, to 428.31 million barrels, the Energy Information Administration (EIA) said on Wednesday.
The fall in U.S. crude inventories was due to a fall in imports by around 500,000 barrels per day (bpd) to an average of 7.08 million bpd last week, and a rise in exports by 86,000 bpd to an average of 1.57 million bpd.
Also supporting prices is the ongoing dollar weakness which makes oil cheaper in global markets, spurring demand.
Middle East tensions between Saudi Arabia and Iran, as well as concerns that the U.S. will reimpose sanctions on Iran, are also supporting oil markets.
If the U.S. does reimpose sanctions on Iran, that would likely result in a 250,000 to 500,000 bpd drop in its exports by year-end, according to energy consultancy FGE.
OPEC has been cutting output by around 1.2 million bpd since January 2017, and the pact is scheduled to go on for the rest of 2018.
OPEC said on Wednesday that the cuts were close to having the desired effect of reducing global inventories to five-year averages, although it gave little detail.