The price of OPEC basket of fourteen crudes stood at 61.10 US dollars a barrel on Wednesday, compared with 60.49 US dollars a barrel on Tuesday, according to OPEC Secretariat calculations.
The benchmark North American oil price hit its highest price in 2 years as lower production from Canadian oilsands coupled with reduced inventories in the US to push down supply, according to CBC.
The price of West Texas Intermediate touched 58.05 US dollars a barrel a little before 6 a.m. ET, up more than a dollar from Tuesday's close. The US crude price is now up by about 35 per cent since a low in June.
Two factors in the recent gain were warnings from two major oilsands companies that they would pump less oil this month and next. Royal Dutch Shell told its customers that output at its 255,000-barrel-per-day upgrader in Scotford, Alta., would be reduced next month, and Syncrude said it would cut volumes from the 350,000-barrel-per-day plant in northern Alberta by about five per cent, Reuters reported.
Last week, the Keystone pipeline that carries 590,000 barrels per day of crude from Alberta's oilsands to markets in the United States, was shut down after 5,000 barrels of oil spilled in South Dakota. That prompted a shutdown of the pipeline while the mess could be cleaned up, and that's also pushing up the oil price.
On Tuesday, the American Petroleum Institute reported that oil inventories dropped by 6.4 million barrels last week, far more than what analysts were expecting.
Oil inventories tend to decline through the summer months — the busiest driving season — but this year's decline is stretching even later than usual.
"There is a shortage of crude oil into the United States. Hence the rally in the prices," VM Oil Associates strategist Tamas Varga said.
While the API figure is closely watched, it isn't the official government number, which is set to come out on Wednesday afternoon.
"If we see the US Energy Information Administration confirming the big draw in crude oil stocks reported by the API last night, I think we will see the market going higher," Varga said.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).