Oil prices rise over 2pc as US inventories decline

    Crude oil storage tanks are shown in an aerial photograph at the Cushing oil junction in Cushing, Oklahoma, USA. REUTERS / FILE

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    Crude oil storage tanks are shown in an aerial photograph at the Cushing oil junction in Cushing, Oklahoma, USA. REUTERS / FILE

    Oil prices rose for a second day on Friday as the market reacted to falling US inventories and signs of strong Asian demand from both China and India added support.

    Brent crude futures rose $ 1.43, up 1.93%, to $ 75.55. West West Intermediate futures rose $ 1.62, or 2.2%, to $ 74.56.

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    “The market is coming to terms with the historic decline in US oil inventories and the diminished prospects of Iranian oil returning to the market,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

    Still, prices on both sides of the Atlantic ended the week slightly volatile, despite significant daily fluctuations. Prices fell earlier this week following the collapse of production talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC +.

    U.S. crude oil and gasoline inventories fell and gasoline demand reached its highest level since 2019, the U.S. Energy Information Administration said on Thursday, signaling growing strength in the economy.

    “An uptrend in the stock market has helped the oil market recover to the black market,” said Stephen Brennock, PVM broker.

    “It is clear that US oil markets are tight. However … the only way to avoid further losses is to reduce the threat of an OPEC + price war,” he added.

    Oil price gains have been curtailed by concerns that members of the OPEC + group could be tempted to abandon production limits set during the Covid-19 pandemic, with talks falling apart due to a stalemate between the major powers. producers in Saudi Arabia and the United Arab Emirates.

    The two OPEC allies in the Gulf disagree on a proposed deal that would have brought more oil to market.

    Russia was trying to mediate in an effort to reach an agreement to increase production, OPEC + sources said on Wednesday. The United States has held high-level talks with officials in Saudi Arabia and the UAE, the White House said on Tuesday.

    “Price wars are almost always short-lived – no one wins in the long run,” consulting firm Rystad Energy said in a note.

    “It is in the interest of the group (OPEC +) to provide some leniency to the UAE and other supply hawks to produce a little more under the agreement.”

    The global spread of the Delta Koranic variant and worries that it could stop a global economic recovery, too, that has affected oil prices.

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