Oil futures settle higher as USA crude stockpiles drop

Still, the decline fell short of the 10.2 million barrel draw that the American Petroleum Institute reported Tuesday, and oil's gains were slippery: USA crude futures rose as high as $48.87 before pulling back.

"Since 1981, LOOP has safely offloaded more than 10 billion barrels of crude oil", said Tom Shaw, LOOP President, adding: "today, customers are seeking the optionality to safely and efficiently load or offload, which is a natural request for a port".

USA crude stocks fell sharply last week as refineries increased output and imports declined, while gasoline stocks decreased and distillate inventories fell, the Energy Information Administration said on Wednesday. In fact, the global Brent crude benchmark is down 13.3% and the U.S. West Texas Intermediate is down 14.4% in the year-to-date period as seen in the chart below.

Oil extended gains from the highest close in seven weeks as industry data showed USA crude stockpiles plunged, easing a glut.

At the same time, Halliburton said that the rate of rig additions in the USA shale patch is slowing down as sub-US$50 oil prices weigh on many energy companies.

In addition, Nigeria agreed to limit its production by curbing its output from 1.8 million bpd once it stabilises to that level.

World oil prices exceeded $51 per barrel and continue rising on July 27. The EIA reported the inventory data on July 19, 2017.

Earlier, oil prices gained support following Saudi Arabia's announcement to restrict crude exports to 6.6 million barrels per day (bpd) in August, a one million bpd decrease from the earlier year.

Refinery crude runs rose by 166,000 barrels per day, EIA data showed.

But last month, China allowed a second batch of crude oil import quotas for independent refiners and some state-held companies for 2017, setting full-year quotas at a total of 91.73 million tons, or 1.83 million bpd. Gasoline demand is still down 0.3 percent for the past four weeks from the year-ago period. If that release shows a similar decline to API, prices will rise even more, said Michael McCarthy, an analyst at CMC Markets.

  • Wendy Palmer