Oil prices were up over 1 per cent on Wednesday and Brent crude rose to its highest level in seven weeks after the US Energy Information Administration reported a drop in US crude stocks and the date for the imposition of US sanctions against Iranian crude exports neared.

Oil prices up after US crude inventories fell 2.6 million barrels last week

Oil prices climbed by over 1 per cent on Wednesday after the US Energy Information Administration reported a drop in US crude and gasoline stocks and data showed Iranian crude exports are falling prior to the imposition of US sanctions against Tehran.

Brent crude rose $1.19, or 1.6 per cent to end the day at $77.14, down slightly from a session high of $77.41/barrel, the highest since July 11.

US oil settled at 98 cents, or 1.4 per cent higher, ending the session at $69.51/barrel, down from a session high of $69.75, the highest since August 7.

The Canadian Crude Index jumped 2.25 per cent to $43.60.

According to data from the US EIA, crude stocks in the United States dropped by 2.6 million barrels last week. Analysts polled prior to the data release anticipated a 686,000 barrel draw in stockpiles.

Oil prices were also underpinned by data showing Iranian crude exports falling faster than expected as customers of the Middle Eastern country shift their purchases to other producers to avoid US penalties.

For the first time since April 2017, Iranian crude and condensate exports are on track to fall below 70 million barrels this month, according to Thomson Reuters Eikon data.

The head of SOMO, Iraq’s state oil company, warned that the sanctions against Iran imposed by the Trump administration will likely result in a shortage of crude.  To compensate for the loss of Iranian production, OPEC says it will discuss compensating for the decline in supply.

Venezuela’s state-run oil company PDVSA says it has signed a $430 million investment agreement which would allow the company to boost its production by 640,000 b/d, but some analysts doubt if the investment would actually go through due to the company’s and country’s instability.

OPEC member Angola reports its crude shipments have declined to their lowest level since December 2006 because of a lack of investment in ageing infrastructure is limiting production.

However, citing increased output from Canada, the US and Brazil, Bank of America Merrill Lynch says the global supply of crude oil could rise towards the end of this year.

Equinor, formerly Statoil, says it plans to develop new oil fields in Brazil.  The company says the move will boost output from 90,000 barrels of oil equivalent per day to between 300,000 and 500,000 boepd by 2030.