Oil prices crept higher this morning adding gains of around one per cent to yesterday's four-month high on news that U.S. fuel inventories may have fallen for a fifth straight week.
Last week the EIA reported a draw of 1.9 million barrels in a not-too-common sync with the American Petroleum Institute, which had estimated inventories to have gone down by 752,000 barrels.
Inventories slipped 2.98 million barrels in the week ended September 30, according to the Energy Information Administration.
In Global oil markets, benchmark Brent crude futures were trading at $51.29 per barrel, up 42 cents, or 0.8 per cent.
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"This is still only a plan, and no final agreement has been made", the bank said, adding that even modest cuts face hurdles given that Iran, Nigeria and Libya have campaigned for exemptions, which would mean members such as Venezuela and Saudi Arabia would have to stomach larger cuts. The news caused West Texas Intermediate prices to spike above $49 shortly after the numbers were released. The S&P 500 Index snapped a two-day losing streak, and closed 0.43 percent higher at 2,159. At the time of writing, WTI was at US$49.59 a barrel, up 1.85 percent from yesterday's close.
"Positive news has already been baked in the cake, and prices could ease lower from here, especially given the rampant rally of recent days", said Matt Smith of New York-based Clipperdata, which analyses data and impact from crude cargoes and supplies. Inventories reached 543.4 million barrels in the week ended April 29, the highest since 1929. A reduction in stockpiles might have been expected to boost prices under most circumstances. "That with OPEC at least starting to talk about cooperating is making it hard to be short". Production decreased 0.4 percent to 8.47 million barrels a day.
Imports of oil slipped by 125,000 barrels per day in the latest week, while refineries operated at 88.3% of capacity, the EIA said. Distillate output stood at over 4.7 million bpd, up on the previous week with stockpiles down by 2.4 million barrels, again in excess of the average for this time of year. Gasoline supplies rose 222,0000 barrels to 227.4 million. Although the United States dollars did see a big 0.7% gain against the Japanese yen as the rally in oil prices and the drop in the VIX reduced demand for safe haven assets.