Inventory declines and supply disruptions drive Brent toward $80, OilPrice said.
Oil markets appear to be back in recovery mode, with both Brent and WTI set for a second consecutive weekly gain. The combination of a supply disruption in Kurdistan and a significant drop in U.S. inventories has helped to push oil prices higher. Later today, bearish sentiment could well return when new U.S. inflation data is released.
The ongoing tug-of-war over Kurdistan’s oil exports continues to act as a major pricing upside for oil prices, with some 500,000 b/d of oil at risk of shut-ins after Iraq ordered a halt to all exports. The huge drop in US crude inventories, driven by stocks in the Gulf Coast, has buttressed the gradual return of ICE Brent to the $80 per barrel mark. New U.S. inflation data might derail that momentum today in a market that appears far more sensitive to sentiment than supply and demand fundamentals.
Kurdish oil producers cut output after pipeline halt. Oil companies active in Iraqi Kurdistan have shut in or reduced production at several oilfields in the region after pipeline transportation to the Turkish port of Ceyhan was halted over the weekend, impacting Norwegian producer DNO and Genel Energy.