Oil prices rise on concerns over tightening supply

Brent crude oil price news: Oil prices rose in early trade on Wednesday, hovering near 10-month highs hit the previous day, as a bigger-than-expected draw in U.S. oil stockpiles and weak U.S. shale output reinforced fears of tight crude supply for the rest of 2023. Global benchmark Brent crude futures climbed 6 cents, or 0.1 per cent, to $94.40 a barrel by 0034 GMT, staying near the highest since November of $95.96 hit on Tuesday.

U.S. West Texas Intermediate crude futures rose 29 cents, or 0.3 per cent, to $91.49 a barrel, not too far from a 10-month high of $93.74 a barrel reached the previous day. The October WTI contract expires on Wednesday and the more active November contract was up 9 cents, or 0.1 per cent, at $90.57 a barrel. Industry data on Tuesday showed U.S. crude oil stockpiles fell last week by about 5.25 million barrels, according to market sources citing American Petroleum Institute figures. Analysts in a Reuters poll had expected a 2.2 million-barrel decline.

"A large drop in U.S. oil inventories and slow U.S. shale output have added to supply concerns coming from extended production curbs by Saudi Arabia and Russia," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities."There will be some short-term adjustments in oil prices because of the recent spike, but expectations of reaching $100 a barrel on both Brent and WTI later this year will remain unchanged," he said.

In a new potential hit to fuel supply, Russia's government is considering imposing export duties on all types of oil products of $250 per metric ton - much higher than current fees - from Oct. 1 until June 2024 to tackle fuel shortages, sources told Reuters on Tuesday. That move comes as U.S. oil output from top shale-producing regions is on track to fall to 9.393 million bpd in October, the lowest since May 2023, and after Saudi Arabia and Russia extended combined supply cuts of 1.3 million bpd to the end of the year.

Meanwhile, Exxon Mobil Corp (XOM.N) has pledged additional oil production of nearly 40,000 barrels per day in Nigeria in a new investment push in the country, a presidential spokesperson said on Tuesday, citing Exxon's president of global upstream operations. A recent surge in WTI that pulled Brent higher has shut arbitrage routes for U.S. crude to Europe and Asia and is preventing oil from the Atlantic Basin from heading east, traders said.

Investors are awaiting a raft of central bank interest rate decisions this week, including one by the U.S. Federal Reserve on Wednesday, to assess the outlook for economic growth and fuel demand.