Supply pressures add up to rally in crude oil prices

The American Petroleum Institute reported after the close of trading Tuesday that U.S. crude oil inventories declined 5.17 million barrels last week. That was more than the 3.37 million barrels forecast by commodity pricing group S&P Global Platts earlier this week.

API data show gasoline stocks were down 930,000 barrels, more than double the Platts forecast.

The price for Brent crude oil, the global benchmark for the price of oil, was up 1.89 percent as of 9:18 a.m. EDT to $74 per barrel. West Texas Intermediate, the U.S. benchmark, was up 1.9 percent to $67.09 per barrel.

Giovanni Staunovo, a commodity analyst and chief investment officer at Swiss bank UBS, said in response to questions emailed from UPI that API is the main driver behind the rally this morning, though official data from the U.S. Energy Information Administration could make or break the rally.

API data has contrasted with gains in U.S. crude oil and gasoline inventories reported by the EIA and lead to major swings downward for the price of oil. EIA data are released at 10:30 a.m. EDT.

"I guess another factor supporting crude is the weaker U.S. dollar," Staunovo added. "Maybe also some support comes from the earthquake in Venezuela, although so far there hasn't been any indication on impact on the oil infrastructure."

The strength of the greenback has an inverse relationship to the price of crude oil. Venezuelan oil production, meanwhile, is at a historic low because of complications stemming from political and economic crises for the member of the Organization of Petroleum Exporting Countries.

Negative pressure on the price of oil could emerge from decisions by the office of the U.S. Trade Representative, which has scheduled hearings this week on additional trade pressure on China.

An official at the American Petroleum Institute said the potential for China to target U.S. oil and natural gas in a reciprocal response was an unwelcome side effect of U.S. trade policies. Companies that manufacture products made of steel and aluminum, for their part, said U.S. tariffs were making consumer goods from outdoor grills to coat racks more expensive.