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Oil prices climb on US gasoline drawdown, snap week-long fall
[SEOUL] Crude oil futures rose on Friday to snap a week-long fall, as US gasoline and distillate inventories dropped more than expected.
Global benchmark Brent crude has lost 4.5 per cent so far this week, and has plunged more than a quarter since May this year.
Brent's new front-month December contract had gained 44 cents, or 0.88 per cent, to US$50.17 a barrel by 0206 GMT, after ending up 4 cents at US$49.73 a barrel. Brent's November contract finished down 44 cents at US$48.71 a barrel on Thursday before expiring.
US crude's front-month November contract rose 55 cents, or 1.19 per cent, to US$46.93 a barrel. It had settled down 26 cents, or 0.6 per cent, at US$46.38 a barrel.
Data from the Energy Information Administration (EIA) showed that gasoline stocks fell by 2.6 million barrels last week, compared with analyst expectations for a 1.7-million barrel drop. It showed that distillate stockpiles, which include diesel and heating oil, declined by 1.5 million barrels versus expectations for a 60,000-barrel drop.
But the EIA data also showed US crude stocks surged by 7.6 million barrels to 468.56 million barrels last week, compared with analyst expectations for an increase of 2.8 million barrels, but less of an increase than the 9.4 million-barrel jump reported by industry group American Petroleum Institute (API). (API/S EIA/S) Oil markets were also supported as Asian shares got a bright start on Friday, catching some of Wall Street's shine after upbeat US price and jobless claims data calmed some recent concerns about the strength of the U.S. economy.
Yet globally growing oil surplus concerns continue to weigh on markets. "We expect the oil price recovery to proceed at a measured pace, with significant oversupply continuing through (the first half of next year) ... as it depends on the relatively slower responses of non-Opec supply and global consumer demand which are now gradually becoming evident," Michael Hsueh at Deutsche Bank said in a note.
Schlumberger Ltd, the world's No.1 oilfield services provider, suggested that it may have to reduce costs further and cut more jobs as it expects any rebound in drilling activity to now take longer than expected.
Meanwhile, investors are waiting for China's latest economic growth data scheduled to be released on Monday. China's economic growth is expected to fall below 7 per cent for the first time since the global financial crisis in the third quarter, putting pressure on policymakers to roll out more support measures as fears of a sharper slowdown spook investors.