Oil rises on large US crude withdrawal, weaker dollar

NEW YORK — Oil prices edged up on Wednesday on a bigger-than-expected US crude storage withdrawal, a slump in US crude output, Chinese economic stimulus, geopolitical tensions and a weaker dollar.

Brent crude futures rose 49 cents or 0.6% to settle at $80.04 a barrel, while US West Texas Intermediate (WTI) crude ended 72 cents up or 1% at $75.09.

China’s central bank will cut the amount of cash that banks must hold as reserves from Feb. 5, a move expected to shore up a fragile economic recovery.

US crude stockpiles tumbled by 9.2 million barrels last week, the Energy Information Administration said, more than quadruple the 2.2-million-barrel draw analysts forecast in a Reuters poll.

“It’s a weather report allaround… Nobody was driving (last week). One big number is domestic production was down, and Bakken production took a big hit,” said Bob Yawger, director of energy futures at Mizuho, a bank.

US crude output fell from a recordtying 13.3 million barrels per day (bpd) two weeks ago to a five-month low of 12.3 bpd last week after oil wells froze during an Arctic freeze.

North Dakota officials have said it could take a month for oil output in the state, which includes the Bakken shale field and is the third biggest oil producing state, to recover after last week’s extreme weather cut production by more than half.

Geopolitical tensions remained in focus the day after a coalition of 24 nations led by the US and Britain conducted new strikes against Houthi fighters in Yemen who have been attacking global trade.

The US said Iran-backed Houthis have mounted 26 attacks since late November on commercial shipping in the Red Sea which was used by about 12% of global oil trade before the attacks.

The US also carried out strikes against Iran-linked militia in Iraq on Tuesday, after an attack on an Iraqi air base wounded US forces.

Elsewhere, tank shells hit a UN training center sheltering tens of thousands of displaced people in the southern Gaza city of Khan Younis, killing at least nine people and wounding 75, as Israeli forces advanced there.

The US dollar, meanwhile, fell to a one-week low against a basket of other currencies. Analysts at energy advisory Ritterbusch and Associates said the weaker dollar was lending some “bullish momentum” to oil prices. —