Oil halts declines as report points to large US stockpile draw

Oil steadied after a two-day drop as an industry report signaled a sizeable drawdown in US commercial crude inventories.

West Texas Intermediate was above $70 a barrel after shedding 1.7% over the previous two sessions, while Brent closed near $73. The American Petroleum Institute said US stockpiles shrank by 4.7 million barrels last week, which would be a fourth straight decline if confirmed by official figures later Wednesday.

Crude has traded in a narrow band for the past two months, supported by geopolitical tensions in the Middle East and Europe, and the threat of further sanctions on supplies from Iran and Russia. That bullishness has been tempered by lackluster Chinese demand and expectations for robust production from non-OPEC+ nations such as the US, where the incoming administration has promised to encourage domestic development.

“Markets will be wary of how quickly Trump issues his ‘drill baby drill’ executive orders and how quickly this impacts US crude production,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “The default is that prices remain in this thoroughly dull $70 to $75 trading range for now,” but a move higher in the first quarter is plausible given OPEC’s extension of production cuts.

Measures targeting Tehran and Moscow remain in focus. The UK announced fresh curbs aimed at alleged “lynchpins” that enable the trade of Russian oil, along with more so-called shadow fleet vessels. The moves came a day after the European Union sanctioned more than 50 ships that haul Russian commodities.

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