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(Bloomberg) — Oil edged lower after closing at the highest level since October 2018 with an industry report pointing to a further draw in U.S. crude stockpiles, adding to signs of a rapidly tightening global market.

Futures in New York traded near $75 a barrel after climbing 1.6% on Tuesday. The American Petroleum Institute said crude inventories slid by more than 4 million barrels last week, according to people familiar with the data. That would be an eighth straight weekly draw, the longest run of declines since January 2018, if confirmed by government figures later on Wednesday.

The International Energy Agency is warning that the oil market — which has already rallied more than 50% this year — will tighten significantly if OPEC+ doesn’t resolve a standoff and boost production. Talks broke down last week and it’s looking increasingly likely that the alliance won’t increase output for August as members lock in supply volumes to customers next month.

The OPEC+ impasse, as well as a Covid-19 comeback in many regions that’s being driven by the fast-spreading delta variant, have added uncertainty to the short-term outlook over the past week.

The market remains in a bullish structure, however, although it’s eased somewhat. The prompt timespread for Brent was 79 cents a barrel in backwardation — where near-dated prices are more expensive than later-dated ones. That compares with 88 cents a week earlier.

See also: U.S. Oil Consumption Surging With Industry Firing at Full Blast

U.S. gasoline stockpiles fell by 1.54 million barrels last week, while distillate inventories rose by 3.7 million barrels, the API said. Nationwide crude supplies are forecast to have dropped by 4 million barrels last week, according to a Bloomberg survey before the Energy Information Administration data.


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