Oil Firm on Surprise U.S. Crude Inventory Draw, OPEC-Led Cuts

OILMONSTER.COM- 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 CLc1 were at $65.20 a barrel, at 0408 GMT, up 3 cents from their previous settlement.

Brent crude futures LCOc1 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 .DXY 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 C-STK-T-EIA 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 Organization 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.

 Courtesy: www.reuters.com