Oil gains ground after US inventory drawdown

Oil futures rose in American trade as the dollar index plumbed July 31 lows, following earlier data from the US, the world's largest energy consumer, which showed another inventory drawdown last week. 

As of 06:02 GMT, US crude futures due in October rose 1.47% to $70.88 a barrel, marking week highs, while Brent November futures added 0.23% to $79.21 a barrel, as the dollar index declined 0.10% to 94.54, marking seven-week lows. 

Another US Inventory Drawdown 

The Energy Information Administration released its report on US crude stocks, showing a drop of 2.1 million barrels in the week ending September 14, compared to a 5.3 million decline in the previous reading, while analysts expected a 2.7 million decline, with total stocks receding to 394.1 million barrels, making them 3% below five-year averages for this time of year. 

Gasoline stocks fell 1.7 million barrels, still 8% above five-year averages, while distillate stocks, including heating fuel, rose 0.8 million barrels, still 2% below five-year averages. 

Oil Officials Talk Cooperation 

OPEC General Secretary Muhammad Barkindo said producers inside and outside OPEC are seeking a long-term cooperation frame by next December, to continue supporting the market in the way they did in the past year. 

Barkindo asserted the strength of oil demand even as some headwinds weigh on them, adding that OPEC should work to extend the deal to cut global output in cooperation with others, mainly Russia. 

Otherwise, Russian energy minister Alexander Novak said the current range of $70-$80 for oil prices is only temporary, due to fears over supply shortages as the US sanctions Iranian oil exports by next November, adding that analysts expect prices to below towards $50 in the long term. 

On another note, Saudi oil minister Khalid Al Falih said the oil market remains in good shape despite concerns about sanctions on Tehran, and mounting US-China trade tensions. 

He added that Saudi Arabia is looking to diversify energy sources and invest more in nuclear and renewable energy. 

US Oil Rig Count 

Baker Hughes, a US oil services company, reported an increase of 7 rigs in the oil rig count to a total of 867 rigs.