Oil rises on draw in US crude stocks, but supply worries remain

Oil prices rose on Thursday after falling around 3 per cent in the previous session, supported by an unexpected fall in US crude inventories.

US crude inventories dropped by 559,000 barrels in the week to September 9, defying analysts expectations of a crude build of 3.8 million barrels.

Brent crude futures were trading at $46.05 per barrel at 0642 GMT, up 20 cents, or 0.4 per cent, from the last settlement. US West Texas Intermediate futures were up 6 cents, or 0.1 per cent, at $43.64 a barrel.

Crude prices fell about 3 per cent for a second straight day on Wednesday following a 4.6 million barrel build in US distillates inventories. The jump was the biggest weekly build since January and put distillate stocks at six-year seasonal highs.

“It’s good news at this time of the year to see a draw like that (in crude stocks),” said Ric Spooner, chief market analyst for CMC Markets.

“But the market seems to be more concerned at the moment about the possibility of a sharp increase of the supply from Libya.”

Crude prices have fallen by around 8 per cent in the last five trading sessions, and concerns are growing over the possibility of returning crude supplies from Libya and Nigeria.

“Both Nigeria and Libya have seen domestic conflicts curb exports. However, both are looking to resume some facilities in the coming weeks,” Australian bank ANZ said in a note.

Libya is working to lift force majeure at its port of Zueitina, indicating that Libyan crude exports could start flowing soon.

Expectations that Nigerian crude supplies could also be returning as offers for October-loading Qua Iboe crude have emerged even as force majeure on the grade remains in place.

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