Investing.com -- Oil prices rose Thursday, adding to the previous session’s gains on increased concerns over the potential for supply disruptions from the crucial Middle East region.
By 09:25 ET (14.25 GMT), the U.S. crude futures traded 0.8% higher at $73.25 a barrel and the Brent contract climbed 0.5% to $78.66 a barrel.
Risk of supply disruptions rises
Both contracts surged around 3% on Wednesday after protests over high fuel prices caused Libya’s El Sahara oil field to halt production, with the field producing about 300,000 barrels per day.
This added to ongoing concerns over Yemen's Iran-backed Houthis targeting shipping in the Red Sea, as well as explosions at the memorial for Qassem Soleimani, a senior Iranian general who was killed in a U.S. airstrike in Iraq in 2020.
Tensions are growing in the Middle East, and although supply from this crucial region has yet to be seriously impacted traders are beginning to add a premium given the growing possibility that this occurs.
U.S. crude inventories fall sharply - API
The market was also supported by data from the American Petroleum Institute, showing U.S. crude stocks fell by a bigger-than-expected 7.4 million barrels last week.
Official data from the Energy Information Administration is due later Thursday, delayed by a day due to Monday’s New Year's holiday.
The API data also showed an outsized build in gasoline and distillate stocks, which could suggest that a mix of high interest rates and cooling economic activity may also be weighing on fuel demand.
That said, U.S. private employers added far more roles than expected in December, with data from payrolls processor ADP (NASDAQ:ADP) indicating that private payrolls came in at 164,000 last month, rising from a downwardly revised mark of 101,000 in November.
The official December U.S. jobs report is released on Friday, and could set the tone for immediate risk appetite.
OPEC+ output could fall in January
The Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, is set to meet early next month, according to Bloomberg, with the members keen to discuss the state of the oil market.
A survey by the news agency points to the group’s output falling by a marginal 40,000 barrels a day in December month-on-month.
“Given that some OPEC+ members agreed on additional voluntary cuts of almost 900,000 bbls/d for 1Q24, OPEC output will edge lower this month,” analysts at ING said, in a note.
(Ambar Warrick contributed to this article.)