Oil rises after US crude stocks draw
London (July 30) Oil prices rose on Thursday after a larger-than-expected draw in U.S. crude and gasoline stocks and figures showing a decline in U.S. oil production.
Benchmark Brent crude LCOc1 was up 80 cents a barrel at $54.18 by 1025 GMT (0625 EDT), after settling 8 cents higher in the previous session. U.S. crude CLc1 rose 30 cents to $49.09, after ending the previous session up 81 cents, or 1.7 percent.
But the gains were restrained by another rise in the value of the dollar, making fuel more expensive for holders of other currencies.
The dollar hit a one-week high ahead of U.S. economic growth data likely to reinforce expectations that the Federal Reserve will raise interest rates as early as September. [FRX/]
"U.S. stocks data were supportive but the dollar strength is putting a brake on the market," said Carsten Fritsch, senior oil analyst at Commerzbank.
Oil prices have more than halved over the last year as key Middle East producers have pumped near record levels, creating a huge oversupply and filling storage tanks around the world.
The Organization of the Petroleum Exporting Countries pumped around 3 million barrels per day (bpd) more than demand in the second quarter and shows no sign of trimming production to prop up prices.
Lower prices have encouraged many oil companies to cut back on drilling and this has started to balance some markets, particularly in the United States, where some shale producers are now operating below breakeven, analysts say.
U.S. crude stockpiles fell by 4.2 million barrels in the week to July 24, more than 20 times analysts' expectations of a decrease of 184,000 barrels, Energy Information Administration data showed on Wednesday.
Gasoline stocks dropped by 363,000 barrels, against analysts' forecasts of a 512,000-barrel gain. [EIA/S]
U.S. crude oil production fell 145,000 bpd in the week to July 24 to 9.413 million bpd, the EIA said.
Dutch Bank ABN AMRO on Thursday cut its crude oil price forecasts for 2016 due to expectations of a global supply glut. It expects Brent to average $65 a barrel in 2016, down from $75 in its previous forecast.
"This downward revision is mainly supply-driven," ABN AMRO senior energy economist Hans Van Cleef said. "Oversupply will remain larger than previously expected."