Oil rises as US crude stockpile drop adds to sense of tighter supply

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Oil prices rose for a second day on Wednesday as an industry report showed US crude inventories declined last week, adding to a sense in the market of tightening supplies.

Brent futures rose 27 cents to $67.90 a barrel by 0005 GMT. US West Texas Intermediate crude futures gained 28 cents to $63.69.

Both benchmarks climbed by more than $1 a barrel on Tuesday as a deal to resume exports from Iraq's Kurdistan stalled, halting pipeline shipments of oil from the region to Turkey despite hopes of a deal to end the deadlock, as two key producers asked for debt repayment guarantees.

The agreement between Iraq's federal and Kurdish regional governments and oil companies would resume exports of about 230,000 barrels per day of oil. Pipeline flows have been stopped since March 2023.

Later in the day, American Petroleum Institute figures showed US crude and gasoline stocks fell, while distillate stocks rose last week, according to market sources citing the API data.

The data showed crude stocks fell by 3.82 million barrels in the week ended September 19, the sources said, while gasoline inventories fell by 1.05 million barrels and distillate inventories rose by 518,000 barrels.

Official US government energy data is due on Wednesday, which is expected to show a gain in both crude oil and gasoline stockpiles and likely decline in distillates.

There are other signs of tightening supply with Reuters reporting US major Chevron will only be able to export about half of the 240,000 bpd of the crude its produces with partners in Venezuela.

In July, the company received a new authorization to operate in the sanctioned country but the new rules will mean less of the heavy, high-sulphur crude produced in Venezuela will reach the US.