Oil prices firm on optimism over declining stocks
SINGAPORE: Oil prices firmed on Wednesday to hold near eight-week highs hit in the previous session, on expectations of a drawdown in US stocks and as a rise in shale oil production shows signs of slowing.
Brent crude futures LCOc1 rose 41 cents, or 0.8 per cent, to $50.61 a barrel by 0617 GMT, after rallying more than 3 per cent on Tuesday.
US West Texas Intermediate futures CLc1 climbed 49 cents, or 1 per cent, to $48.38 a barrel.
US crude stocks fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, data from industry group the American Petroleum Institute showed on Tuesday. Crude inventories declined by 10.2 million barrels in the week ending July 21 to 487 million, compared with expectations for a decrease of 2.6 million barrels.
The market has been buoyed by Saudi Arabia’s announcement at a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and non-Opec producers on Monday that it would limit crude exports to 6.6 million barrels per day (bpd) in August, down nearly 1 million bpd from a year earlier.
“This has seen expectations of further drawdown in inventories increase,” ANZ said in a research note, referring to the Saudi plans.
Nigeria also agreed to join a push to rein in production by capping or cutting its output from 1.8 million bpd once it stabilizes at that level.