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Oil rises on U.S. crude inventory draw, falling Chinese output

Oil&Gas Materials 19 October 2016 05:20 (UTC +04:00)
Oil prices rose on Wednesday, lifted by a report of a drop in U.S. crude inventories and declining production in China, while an upbeat OPEC statement on its planned output cut also supported the market
Oil rises on U.S. crude inventory draw, falling Chinese output

Oil prices rose on Wednesday, lifted by a report of a drop in U.S. crude inventories and declining production in China, while an upbeat OPEC statement on its planned output cut also supported the market, Reuters reported.

A slightly weaker dollar boosted oil as well, traders said, as it makes fuel purchases cheaper for countries using other currencies, potentially spurring demand.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.73 per barrel at 0326 GMT, up 44 cents, or 0.87 percent, from their last settlement.

International Brent crude futures were at $52.14 a barrel, up 46 cents, or 0.89 percent.

"The American Petroleum Institute crude inventory numbers were released ... this has given early Asian trading a bullish start," said Jeffrey Halley, senior market analyst at OANDA in Singapore.

U.S. crude stockpiles fell 3.8 million barrels in the week to Oct. 14, to 467.1 million barrels, the API reported late on Tuesday.

The U.S. Energy Information Administration (EIA) is due to release official crude and fuel storage data later on Wednesday.

Traders said oil was supported by Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), saying he is confident about the prospects of a planned production cut following an OPEC meeting on Nov. 30.

"I am optimistic we will have a decision," he said.

In its first output cut agreement since 2008, OPEC said it plans to reduce production to 32.50 million to 33.0 million barrels per day (bpd), compared with record output of 33.6 million bpd in September.

The group also hopes non-OPEC producers, especially Russia, will cooperate in a cut.

In China, a raft of economic and trade data was released on Wednesday.

While economic growth was in line with expectations, at an annual growth rate of 6.7 percent in the third quarter, its oil figures were supportive of higher oil prices, traders said.

China processed 43.8 million tonnes (10.7 million bpd) of crude oil in September, up 2.4 percent from a year ago, government data showed on Wednesday.

Over the same month, China's oil production fell 9.8 percent to 15.98 million tonnes (3.89 million bpd), in its steepest decline in 19 months.

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