The oil price is higher Wednesday, in the wake of an industry report showing US oil inventories have fallen. The weekly report from the American Petroleum Institute showed a 1.047 million barrel draw in the week ending April 13. That follows a surprise inventory rise in the prior week.
By around midday Wednesday the price of Brent Crude oil was 1.01% higher at $72.30 per barrel. The price of US WTI crude, meanwhile, rose 1.16% to $67.28.
Geopolitcal risk currently outweighs US production growth outlook
The draw on US crude oil levels – which was largely expected – comes as supply concerns amid the ongoing Syrian conflict are raised. That’s something that’s also exacerbated by a decline in production from Venezuela.
Oil production in Syria has been decimated by the ongoing civil war there and if the conflict expands in the wake of coalition action, the potential for the recovery of oil production from the region would take even longer to achieve.
As Syria tensions escalate, analysts have increased their oil price outlook.
Credit Suisse now expects an average oil price of $70 per barrel. Meanwhile JP Morgan said the oil price could even hit $80 per barrel should things in Syria worsen.
In addition, the ongoing Vienna agreement between OPEC and some non-OPEC producers is also continuing to limit production levels, something that’s adding to the upward pressure on the price of oil.
US shale oil production
While worries over an oil production slowdown are currently working to lift the oil price, other developments continue to limit that upward movement.
The main detail at work is the expected increase of US shale oil production. US oil production was reported to have risen to 10.525 million barrels per day in the week ended April 6.
Meanwhile, the Energy Information Administration is expecting an increase in US oil production of 125,000 barrels per day in May from April.