Drop in US oil inventories lifts prices

[NEW YORK] Oil prices climbed more than five per cent Wednesday after US inventory data showed a sizeable drop in petroleum stocks, the first decline in seven weeks.

US benchmark West Texas Intermediate for May delivery gained US$1.86 to US$37.75 a barrel on the New York Mercantile Exchange.

Brent North Sea oil for June delivery rose US$1.97 to US$39.84 a barrel in London.

US commercial crude oil inventories fell by 4.9 million barrels for the week ending April 1, according to US Department of Energy data.

The report, following a 2.3 million barrel increase last week, represented a sharp swing that suggests a significant shift in the market, said Bob Yawger of Mizuho Securities.

The data also showed a rise in refinery utilization, suggesting petroleum refiners may be finishing maintenance season earlier than usual, he said.

"There's hope of a very solid gasoline season coming up," Mr Yawger said.

"That would happen because gasoline is cheap."

US oil production also fell last week, in another bullish sign. However, on a more bearish note, gasoline supplies rose by 1.4 million barrels.

Analysts were also heartened by comments from Kuwait's Opec governor, Nawal al-Fezaia, who told Bloomberg News that producers "have no option" but to freeze output, even if Iran does not join an agreement to cap production in response to low prices.

But Ric Spooner, chief market analyst at CMC Markets in Sydney, said traders were likely to wait for the results of an April 17 meeting of producers in Qatar before making big bets.

"Given the welter of statements... people are probably just going to ignore (the comments) until they get the results of the meeting," Mr Spooner told AFP.

AFP