Oil prices climb as US stockpiles fall

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10 Aug, 2017

Oil prices climb as US stockpiles fall

Oil futures jumped on Thursday after official US data showed crude inventories fell more than expected, with the market still clearly settling into a range amid quiet trading, said analysts.

Global benchmark Brent crude, was up 18 cents, or 0.3%, at $52.88 at around 0617 GMT, after sliding modestly earlier. It closed 1.1% higher on Wednesday, accumulating two days of declines.

U.S. West Texas Intermediate (WTI) crude was up 16 cents, or 0.3%, at $49.72, after declining earlier. The contract inched 0.8% in the previous session.

"Broadly I think the market is trading sideways at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

US crude stockpiles fell last week as refiners pumped out material to the highest rate of capacity in 12 years, the Energy Information Administration said on Wednesday.

Oil inventories in the US fell by 6.5 million barrels last week, a greater-than-expected decrease of 2.7 million barrels.

"It does create the hope that we are going to end the summer driving season with inventories below the year before, which would be a positive development," Spooner said.

Refiners processed nearly 17.6 million barrels of crude, beating the record hit in May, and most others for any week since the US department of energy began storing data in 1982.

However, a surprise increase in petrol stocks is capping upward movements in oil prices and mitigating attempts by OPEC, Russia and other producers to boost prices that are about half of levels three years ago.

"All the crude that was drawn was basically run through the refineries and this resulted in a gasoline build of 3.4 million barrels," said Matt Stanley, a commodities broker at Freight Investor Services in Dubai.

"The minute OPEC try and raise prices by cutting production the U.S. producers will react accordingly to fill the void. This results in a tug of war that we have witnessed all year and the final outcome is a rangebound market," he added.

They are slashing output by about 1.8 million barrels per day (bpd) under an agreement set to run until March 2018.

The deal has backed prices, but a recovery in output in Libya and Nigeria - OPEC members which are exempt from the cut – are complicating the initiative.

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