Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant

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  • U.S. crude inventories drop 7.1 million barrels -EIA
  • U.S. crude exports hit 5 million bpd, highest on record -EIA
  • Russia begins to increase oil production thanks to strong Asian demand
  • EU and US study Iran’s response to nuclear proposal

HOUSTON, Aug 17 (Reuters) – Oil prices rose around 1.5% after hitting a six-month low on Wednesday, as a bigger-than-expected decline in U.S. crude inventories outweighed concerns about the increase in Russian production and exports as well as fears of recession.

U.S. crude inventories (USOILC=ECI) fell 7.1 million barrels in the week of August 12 to 425 million barrels, according to data from the Energy Information Administration (EIA), compared to forecasts analysts of a drop of 275,000 barrels in a Reuters poll.

Brent crude stood at $1.31, 1.42% higher at $93.65 a barrel. Earlier in the day, recession worries pushed the benchmark price to its lowest since February at $91.51.

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U.S. West Texas Intermediate (WTI) crude rose $1.58, or 1.8%, to $88.11 a barrel.

U.S. crude exports hit 5 million barrels a day, the highest on record, according to EIA data, as WTI traded at a steep discount to Brent, making U.S. crude buying more attractive to foreign buyers.

In a sign of strong demand, gasoline inventories drew 4.6 million barrels, well above the forecast drawdown of 1.1 million barrels.

“It was expected to be a friendly report and it was pretty much across the board. Some of the demand destruction concerns the market was going through seem to have eased a bit,” said analyst Phil Flynn. of the Price Futures group.

The American Petroleum Institute had reported a drawdown of 448,000 barrels in crude stockpiles and 4.5 million barrels in gasoline stockpiles on Tuesday, sources said.

Oil soared in 2022, approaching an all-time high of $147 in March after Russia invaded Ukraine.

However, Russia began to gradually increase its oil production after the sanctions-related restrictions and as Asian buyers increased their purchases, leading Moscow to raise its production and export forecasts until the end of the year. end of 2025, according to an Economy Ministry document seen by Reuters. Read more

Russia’s revenue from energy exports is expected to rise 38% this year, partly due to higher oil export volumes, the document said, a sign that the country’s supply has not been affected as much as the markets had originally expected.

The prospect of a recession has also weighed on oil prices more recently. UK consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying pressure on households and pushing oil prices lower earlier in the day. Read more

“There are growing downside risks due to the growth outlook and continued uncertainty around China’s COVID-related restrictions,” said Craig Erlam of brokerage OANDA.

An exodus of participants, particularly hedge funds and speculators, has made daily price swings much larger than in previous years. Read more

On the oil supply front, the market is awaiting developments in talks to revive the 2015 nuclear deal between Iran and world powers, which could eventually lead to an increase in Iranian oil exports.

The European Union and the United States said on Tuesday they were studying Iran’s response to what the EU called its “final” proposal to salvage the deal. Read more

Goldman Sachs analysts said a return of Iranian crude supply would cut their forecast for 2023 by $5 to $10 a barrel, down from $125 a barrel.

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Additional reporting by Alex Lawler in London, Yuka Obayashi in Tokyo and Emily Chow in Kuala Lumpur; Editing by David Evans, Kirsten Donovan, Deepa Babington, Alexander Smith and Richard Chang

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