US inventories lift oil to 8-week highs

london — Oil prices rose to near eight-week highs on Wednesday, as a fall in US inventories bolstered expectations that the longoversupplied market was moving toward balance.

Brent crude futures rose 40¢ to $50.60 a barrel by 1213GMT, after rallying more than three per cent on Tuesday. US West Texas Intermediate futures climbed 50¢ to $48.39 a barrel.

US crude stockpiles fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, the industry group the American Petroleum Institute said on Tuesday.

Crude inventories fell 10.2 million barrels in the week ending July 21 to 487 million, more than the expected decrease of 2.6 million barrels. Data from the US Energy Information Administration on Wednesday could provide more support, with forecasts of a drop for a fourth week in a row.

Tuesday’s stock draw added to hopes the long-awaited oil market rebalancing was underway.

Saudi Arabia said on Monday it would limit oil exports to 6.6 million bpd in August, down nearly one million bpd from a year earlier. “The market has been tightening and the refinery margins are strong,” said PetroMatrix managing director Olivier Jakob, saying the US stock draw offered a boost to prices.

“You add geopolitical risk premium for Venezuela, and you’ve got a strong market.” —