Oil held steady after a two-day decline after an industry report flagged a significant drop in U.S. commercial crude inventories.
Brent crude was trading above $73 a barrel, having lost 1.8% over the previous two sessions, while West Texas Intermediate was near $70. The American Petroleum Institute said U.S. inventories shrank by 4.7 million barrels last week, which would be a fourth straight decline if confirmed by official figures later Wednesday.
Crude oil has traded in a narrow range over the past two months, supported by geopolitical tensions in the Middle East and Europe, and the threat of further sanctions on supplies from Iran and Russia. That is tempered by subdued Chinese demand and expectations for robust production from non-OPEC countries such as the US, where President-elect Donald Trump has promised to boost domestic development.
“Markets will be wary of how quickly Trump issues his ‘drill baby drill’ executive orders and how quickly this will impact U.S. crude oil production,” said Robert Rennie, head of commodities and carbon research at Westpac Banking Corp. “The standard is that prices keep rising. currently in this extremely boring trading zone of $70 to $75,” but a rise in the first quarter is plausible given OPEC’s extension of production cuts.
Measures against Tehran and Moscow remain central. Britain has announced new measures targeting so-called “pivots” that allow trade in Russian oil, as well as so-called shadow fleet ships. The measures came a day after the European Union imposed sanctions on more than fifty ships transporting Russian raw materials.
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