Oil prices were firm on Thursday, buoyed by a surprise decline in U.S. crude inventories as well as ongoing supply cuts led by OPEC, although a relentless rise in U.S. oil output threatens to undermine efforts to tighten the market.
U.S. West Texas Intermediate (WTI) crude futures were at $65.20 a barrel, at 0408 GMT, up 3 cents from their previous settlement.
Brent crude futures were at $69.44 per barrel, down 3 cents from their last close.
Both benchmarks are hovering just below their highest since early February, having risen around 10 percent from March lows.
Some support for crude futures came from currency markets, where the dollar fell as Federal Reserve officials stuck to their view of three rate increases for 2018, even as they delivered an expected quarter point rate hike.
In oil markets, U.S. crude inventories fell 2.6 million barrels in the week ended March 16 to 428.31 million barrels, the Energy Information Administration (EIA) said late on Wednesday.
“Oil… had a big session overnight although this wasn’t just a function of the interest rate move. Inventory data for last week showed a surprise crude draw as well as significant drawdowns in both gasoline and distillates inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
Dutch bank ING said the drawdown in U.S. crude inventories was down to a fall in imports by around 500,000 barrels per day (bpd) to an average 7.08 million bpd last week, and a rise in exports by 86,000 bpd to an average 1.57 million bpd. Also, refinery utilization rates rose above 90 percent for the first time since early February.
Further supporting oil prices has been supply restraint led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, which started in 2017 and is scheduled to go on for the rest of 2018.
OPEC said on Wednesday the cuts were close to having the desired effect of bringing down global inventories to five year averages, although it gave little detail.
U.S. bank Goldman Sachs said OPEC was “likely to overshoot on the inventory rebalancing”, and as a result, it saw Brent reaching $82.50 per barrel by mid-year.”
The overall bullish mood is being somewhat tempered by U.S. crude production, which climbed to a fresh record of 10.4 million barrels per day (bpd) last week, putting the United States ahead of top exporter Saudi Arabia and within reach of Russia’s 11 million bpd.
Source: Reuters
