Oil is rising again Wednesday, lifted by a surprise fall in US crude oil inventories as well as concerns that tensions in the Middle East could escalate and cause supply disruptions.
Brent, the internationally traded crude is up at $28.22 a barrel while the US light crude is trading at $52.07.
It has also emerged that Canadian oil firms are retrenching, with large producers planning little or no further expansion and some smaller projects struggling even to cover their operating costs.
As the era of large new projects comes to a close, many mid-sized oil producers – those with fewer assets and producing less than 100kbbl/day in the oil sands – have shelved expansion plans, unable to earn back the high start-up costs with crude at around 50 $/bbl.
A fall in crude inventories matched by rising demand in Asia, especially China is helping OPEC achieve its target of rebalancing the oil market and pushing price back to $60 analysts said.
In the Middle East, Iraqi forces are now said to have completed an operation to take control of all oil fields operated by state-owned North Oil Company in the Kirkuk region stirring new tension in OPEC’s number two producer by volume.
Iraqi forces took control of the Bai Hasan and Avana oil fields northwest of Kirkuk on Tuesday, after seizing the Baba Gurgur, Jambur and Khabbaz fields on Monday.
In the meantime, South Korea said this morning that its plan to ease blending restrictions at oil storage terminals will come into effect on Thursday, as the government continues its push to boost international oil trading in the country. The world’s fifth largest oil importer in April approved legislation to ease restrictions on companies blending refined fuels at oil terminals, but the exact start date was not released at that point
