The bottleneck in North America likely contributed to a 4.9 million barrel rise in United States crude oil inventories, to 435.6 million barrels, that the American Petroleum Institute reported on Tuesday.
"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the USA", said Singapore-based brokerage Phillip Futures.
Oil prices hit a 3-1/2-year high on Tuesday, supported by tight supply and planned US sanctions against Iran that are likely to restrict crude oil exports from one of the biggest producers in the Middle East. Brent crude oil LCOc1 reached $79.22 a barrel, up 99 cents and its highest since November 2014.
The Secretary-General, Organisation of the Petroleum Exporting Countries (OPEC), Mohammed Barkindo, attributed the rising oil prices to efforts by OPEC and non-OPEC countries to rebalance the market through production freeze. "The loss of Iranian barrels could tighten supplies of Middle Eastern medium-sour crudes and be supportive of Dubai oil, as traders watch for any response from other Gulf producers".
OPEC figures published on Monday showed oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, from 340 million barrels above the average in January 2017.
The data poses worries that near-record high refinery runs may be short-lived. Current crude exports from Iran are around 2.6 million barrels per day; over one million barrels higher than the 1.5 million exported under the sanctions imposed by Barack Obama in 2012. The coming USA sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal.
Despite these downward forces, the market retains support from OPEC and other producers' production cuts and US sanctions on Iran. Although the group said its crude output inched up in the previous month, investors interpreted the minimal increase as a sign of OPEC's continued commitment to rebalancing the market, especially from its de facto leader Saudi Arabia.
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