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Oil hits 2015 highs after first US crude stocks drop in 4 months
[NEW YORK] Oil hit new highs for 2015 on Wednesday, inspired by the first US crude stockpiles drop since January, before paring gains as investors and traders moved to take profits on a multi-week rally.
The dollar's recent tumble also fed the run-up in oil and other commodities, as those raw materials became more affordable for holders of the euro and other currencies.
US crude futures rallied more than US$2 to the year's high of US$62.58 a barrel before consolidating to show an 80 cent gain at US$61.20 a barrel by 12:54 pm EDT (1654 GMT).
Futures of UK North Sea Brent, the more globally-used benchmark, were up 60 cents at US$68.12 a barrel, having reached a 2015 peak of US$69.93 earlier.
US crude prices have risen every week since March 13, while Brent has seen weekly gains since April 3.
Wednesday's rise came after the US Energy Information Administration (EIA) said crude stockpiles fell 3.88 million barrels last week, the first drop in four months.
The draw was more than double that projected by industry group American Petroleum Institute. A Reuters poll of analysts had estimated US crude stocks to rise last week for a record 17th week in a row.
The EIA data lent conviction to oil bulls' bets that the global oversupply in crude could finally be easing.
But skeptics said more work was needed to balance supply-demand in the market, which they said was overpriced after Brent's 21 percent rally in April and US crude's 25 percent gain. Crude prices had tumbled earlier, by more than 50 percent since June on worries of an oil glut.
"We have come up a long way in a short time," said John Kilduff, partner at New York energy hedge fund Again Capital, referring to the rally of recent weeks. "People will ultimately realise that prices above US$60 a barrel are going to reopen lots of idled oil rigs, meaning more supply."
Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, noted that while last week's US crude draw was bullish, there had been builds before for 16 straight weeks that had left more than 485 million barrels in storage. "I'm not a big buyer of the idea that the fundamental picture has changed as yet. And the market continues to go higher as much as I feel it's overextended, and it doesn't look like the run up is over yet."