Oil prices hit two-week highs after surprise US inventory drawdown

Oil prices rose in European trade for third straight session Wednesday, hitting two-week highs after initial data showed a surprise drawdown in US crude stocks. 

Now traders await official inventory data from the Energy Information Administration later today. 

Prices are also underpinned by supply disruptions in the Iraqi Kurdistan region, with signs of improving demand in China after reopening the economy. 

Global Prices

US crude rose 0.8% to $74.17 a barrel, the highest since March 14, while Brent added 0.7% to $78.94 a barrel, the highest since March 14 as well.

US crude rose 1% yesterday, while Brent gained 0.8% after disruption in Kurdish supplies. 

US Stocks

Initial data from the American Petroleum Institute showed US crude stocks fell 6.1 million barrels in the week ending March 24, while analysts expected a buildup of 1.8 million barrels. 

Such a sudden drop is a positive sign for fuel demand in the US, the world's largest fuel consumer. 

Kurdish Supplies

Turkey stopped the Kurdistan Region from pumping crude through its oil pipeline after a court order than required the approval of the Iraqi government to ship the oil.

Such legal conflicts in Iraq between the federal government and Kurdistan led to a cut of 450 thousand bpd in crude exports.

Barkley's expects an increase of $3 a barrel in crude stocks from its $92 projections for Brent in 2023 with a long-term disruption in Kurdish exports. 

Chinese Demand

Recent estimates from the government point to an increase of 6.2% in China's crude imports this year to 540 million tones.