Oil closes higher as US inventories expected to fall

Oil drilling rigs

Crude oil prices closed positive today, Sept. 6, amid expectations that US crude inventories will decline following the extension of production cuts in Saudi Arabia and Russia.

Prices fell in early session on fears of raising interest rates in the US, after the services PMI increased by 1.8 points to 54.5 points in August, contrary to expectations for a decline to 52.5 points. The index recorded growth for the eighth month in a row.

The dollar index rose to touch 105.02, exceeding the highest level in six months of 104.90 it had touched on Sept. 5. The rise in the dollar affects the demand for oil as crude becomes more expensive for holders of other currencies.

The American Petroleum Institute's report on oil inventories is expected later today, and the US Energy Information Administration is scheduled to issue official data on inventories on Sept. 7, amid expectations that crude inventories will fall by 1.43 million barrels.

Callum Macpherson, Head of Commodities at Investec, said: “The price cap mechanism unveiled by the G7 this year achieved its goal of limiting oil revenues from Russia, without unduly inflating oil prices amid OPEC supply cuts,” Oil Price website reported.

Russia's exports of petroleum products – diesel and fuel oil – fell by 9% on a monthly basis to 2.28 million barrels per day in August, the lowest level in 11 months, with refineries reducing their operations in preparation for maintenance, Bloomberg reported.

In an interview with the news agency, an IMF economist said: “Despite the extension of oil production cuts, Saudi Arabia is set to maintain growth momentum in its non-oil sector, which represents about 60% of GDP.”

Brent crude futures for November delivery rose 0.6%, or 56 cents, to $90.60 a barrel, after falling to $89.25 during the session.

WTI crude for October delivery also rose 1%, or 85 cents, to record $87.54 per barrel, after falling during trading to $85.93.