Oil climbs as US crude, petrol supplies shrink

Oil rose after government data showed US crude and gasoline stockpiles continue to fall amid broader anxiety about a supply glut.

Futures rose as much as 1.7 per cent in New York on Wednesday. US crude inventories fell by 4.73 million barrels last week, the Energy Information Administration reported.

Petrol supplies shrank by 4.44 million barrels, the most since March but the data contradicted Tuesday’s industry report that showed a surprise build in crude, according to Bloomberg.

“It’s definitely a bullish report here today. Across-the-board draw-downs can’t be ignored,” said a Partner at Again Capital LLC, a New York-based hedge fund, John Kilduff.

Oil has lingered below $50 a barrel despite an agreement by the Organisation of Petroleum Exporting Countries and its allies to curb output amid stubbornly high global supplies. Concern is growing that the deal may fray after OPEC member Ecuador said this week that it won’t be able to maintain its pledged cuts.

“Only continuous falls in total US commercial and crude oil stocks will provide us with credible evidence that re-balancing is, in fact, happening,” said an analyst at PVM Oil Associates Ltd in London, Tamas Varga.

West Texas Intermediate for August delivery, which expires Thursday, was at $47.08 a barrel on the New York Mercantile Exchange, up 68 cents, at 10:33 a.m. Total volume traded was about 18 percent below the 100-day average.

Brent for September settlement rose 75 cents to $49.59 a barrel on the London-based ICE Futures Europe exchange. Prices gained 42 cents to end Tuesday’s session at $48.84. The global benchmark crude traded at a premium of $2.30 to September WTI.

Ecuador Oil Minister, Carlos Perez, said late on Monday the nation would start raising oil production this month, arguing it needs the money. On Tuesday, after speaking with Saudi Arabia’s energy minister, Perez issued a statement saying his country and the Saudis remain committed to reducing inventories to a “normal” level as part of OPEC’s strategy to boost crude prices.