Oil prices rise on reported US crude stock draw, Norway strike

Singapore (Reuters): Oil prices jumped over 1% on Wednesday, pushed by a reported draw in U.S. crude inventories and an oil service worker strike in Norway which may impact output.

Firm import data from Japan also supported prices, traders said.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 1.93%, or 85 cents, at $44.90 a barrel at 0644 GMT. The October contract expired Tuesday at $43.44 a barrel and the front-month has now rolled over to November delivery.

Traders said the main WTI price driver was American Petroleum Institute data showing a 7.5 million barrel draw to 507.2 million barrels in U.S. crude inventories.

Official storage data is due to be published by the U.S. Energy Information Administration (EIA) later on Wednesday, and traders said they were also eagerly anticipating a meeting by the U.S. Federal Reserve’s Federal Open Market Committee (FOMC), which might influence U.S. interest rates. “Wednesday has become ‘Big Wednesday’ for oil traders, with not only the FOMC but also the EIA crude inventory numbers out … Should they (EIA) follow the unexpected drawdown like the API and we get no FOMC rate hike, oil bulls may well have reason to be cheering after a tough couple of weeks,” said Singapore-based brokerage Oanda. Brent crude futures were at $46.53 per barrel, up 65 cents, or 1.42%, from their last close, supported by an oil service worker strike in Norway that risks impacting output in western Europe’s biggest crude producer. Traders said that Brent was also being supported by firm imports from Japan. Japan’s crude imports rose 0.5% in August from the same month a year earlier, the Ministry of Finance said on Wednesday, reaching 3.38 million barrels per day last month.

Overall, however, oil markets remain oversupplied as exporters around the world pump near record amounts.

Oil producers from the Organization of the Petroleum Exporting Countries (OPEC) and Russia plan to meet in Algeria next week to discuss measures to rein in the oversupply, including an oil production freeze at current output levels, but analysts said they did not expect significant results.

“OPEC members will not agree on a production freeze ... Political tensions will prevent cohesion, and individual members will continue to protect market share from resilient non-OPEC producers,” BMI Research said in a note to clients.

“Even with a freeze - which would still mean OPEC production is at record levels – we will still be in an oversupplied market,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.