By Laura Sanicola
NEW YORK (Reuters) -Oil prices rose on Wednesday, reversing early declines as traders anticipated further draws on U.S. crude oil inventory following extended production cuts in Saudi Arabia and Russia.
Brent crude futures rose by 72 cents to $90.76 a barrel at 1:26 p.m. EDT (1726 GMT). U.S. West Texas Intermediate crude (WTI) futures rose 89 cents, or 1%, totrade at $87.58.
“We have pretty low crude supplies in the U.S., with several weeks of big crude oil draws pushing prices up,” said Bob Yawger, director of energy futures also at Mizuho.
Six analysts polled by Reuters estimated on average that U.S. crude inventories fell by about 2.1 million barrels in the week to Sept. 1.
The poll was conducted ahead of reports from the American Petroleum Institute industry group, due at 4:30 p.m. EDT (2030 GMT) on Wednesday, and the U.S. Energy Information Administration, due at 11 a.m. EDT (1500 GMT) on Thursday.
Both sets of data arrive a day later than usual due to Monday’s Labor Day holiday.
On Tuesday, Saudi Arabia and Russia extended voluntary oil supply cuts to the end of the year. The Saudi cuts were by 1 million barrels per day (bpd) while Russia has cut 300,000 bpd. These cuts were on top of the April cut agreed by several OPEC+ producers running to the end of 2024.
Both countries will review market conditions and make monthly decisions on deepening cuts or raising output.
Reflecting near-term supply concerns, front-month Brent futures traded near 9-month highs at $4.13 a barrel above prices in six months. The equivalent spread for U.S. WTI futures was as much as $4.88 a barrel, also near nine-month highs.
Early in the session, oil prices fell on rate-hike concerns and investor worries about the economy after data showed the ISM non-manufacturing Purchasing Managers’ Index (PMI) came in at 54.5, compared with expectations of 52.5.
“This is fuelling worries about interest rates staying higher for longer, and what does that mean for demand,” said John Kilduff, partner at Again Capital LLC in New York.
Against a basket of currencies, the dollar was at 104.98, above the six-month high of 104.90 touched overnight. A stronger dollar can weigh on oil demand by making crude more expensive for holders of other currencies.
Analysts warned that price rises could hit demand when U.S. refineries enter their September-October maintenance period. Potentially higher supply from Iran, Venezuela and Libya could also weigh.
Research company IIR Energy said on Wednesday it expects U.S. oil refiners to increase available refining capacity by 274,000 bpd for the week ending Sept. 8.
(Additional reporting by Paul Carsten in London, Mohi Narayan in New Delhi; Arathy Somasekhar in Houston; Editing by David Evans, Jason Neely, Nick Zieminski, Nick Macfie and David Gregorio)
