Brent crude hits two-month high as stockpiles dwindle

Brent crude
The price of Brent crude has lowered.

Brent crude traded near a two-month high as shrinking oil inventories pointed to an increasingly tight global market.

Futures in London were up 0.5 percent after surging 2.2 percent on Tuesday. Industry data showed U.S. inventories slid 8.64 million barrels last week.

The U.S. government cut its outlook for oil production due to pipeline bottlenecks. Meanwhile, Hurricane Florence threatens to disrupt fuel supplies as it moves toward North Carolina.

Impending U.S. sanctions on Iran have started forcing buyers to shun imports from the Islamic republic before a November deadline.

With frequent attacks on Libya’s production and falling output in Venezuela, traders are weighing whether the Organization of Petroleum Exporting Countries and its allies, as well as the U.S., will be able to make up the shortfall.

“The oil price is being given a boost by the API’s report, which shows that U.S. crude oil stocks fell sharply,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.

West Texas Intermediate for October delivery rose as much as $1.31 to $70.16 a barrel on the New York Mercantile Exchange and traded at $70.05 a barrel as of 1:44 p.m. London time.

The contract climbed 2.5 percent, or $1.71, to $69.25 on Tuesday. Total volume traded was about 33 percent above the 100-day average.

Brent for November settlement rose 38 cents to $79.44 on the ICE Futures Europe exchange after a 2.2 percent advance on Tuesday.

The global benchmark traded at a $9.63 premium to WTI for the same month.