US oil prices pared gains Wednesday after the USA government report a larger-than-expected drop in crude stocks for last week, but profit-taking after the data kept prices below the $50 a barrel level that oil bulls had been hoping for. The price of Brent crude, the global benchmark, rose $1.13 to $49.74.
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Traders had been gearing up for a drop of around 1.7m barrels.
Futures were little changed in NY after advancing 3.8% the previous three sessions.
USA oil production, which slipped for an 11th week, hit its lowest level since September 2014, further supporting the inventory drawdown.
However, some analysts believe that oil’s recent rise is not going to last given that there is still not enough demand to meet excess supply, not to mention the fact that the Organization of the Petroleum Exporting Countries (OPEC) is set to ramp up production.
The Energy Information Administration will also release its weekly estimate of production.
As U.S. imports of Nigerian oil decreased over the past few years, European and Asian imports from Nigeria increased.
“I don’t think the rally will last because prices will reach a level that will bring USA shale oil output back into the market”, he added.
“Sentiment in the oil markets has shifted and the bulls appear to be taking over the reins”, said JBC Energy, a Vienna-based consultancy.
“Overall I would give the [EIA] report a bullish grade”, said Kyle Cooper, consultant at ION Energy.
Gasoline stocks rose 2 million barrels to 240.1 million barrels against forecasts of a 1.1 million-barrel drop, the EIA said.
13 a barrel, up 51 cents compared with Tuesday’s close.
“With each of these shifts significant in magnitude, the oil market has gone from nearing storage saturation to being in deficit much earlier than we expected”.
One hundred and seventy-two years after Stuart Perry patented the gasoline engine, and oil is chugging higher once more.
“Geopolitical issues in West Africa and the Middle East, supply outages, increased demand and maybe a touch of a weaker dollar have all helped push prices higher”, said Sydney’s Ayers Alliance chief investment officer Jonathan Barratt.
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Abhishek Deshpande, an oil markets analyst at Natixis, agreed and said: “We believe that the market is going up, but if it goes too quickly there will be auto-corrections”.
