Oil prices rise on fall in US inventories

[NEW YORK] Oil prices rose on Thursday following two days of losses, getting a lift from a fall in US crude inventories, while a key Opec meeting left production unchecked.

Prices dropped after the twice-yearly meeting of the Organisation of the Petroleum Exporting Countries in Vienna concluded, as expected, with no agreement to lower or cap production in the face of abundant global supplies.

But the market turned higher after the US Department of Energy reported the country's commercial crude oil inventories fell last week by 1.4 million barrels, though at 535.7 million barrels they remained at historically high levels.

The DoE also said there were draws in gasoline and other petroleum product inventories.

In New York, US benchmark West Texas Intermediate crude for July delivery rose 16 cents to US$49.17 a barrel.

Brent North Sea crude for August delivery, the European benchmark, advanced 32 cents to US$50.04 a barrel in London.

"The decline in (US) stockpiles is helping underpin prices for now - but the supply and demand dynamics have not changed," CMC Markets analyst Michael Hewson told AFP.

"The big question is how much more upside can we potentially see." Earlier, Opec left policy unchanged as the recent modest recovery in oil prices eased the pressure to limit output, with Saudi Arabia saying the cartel was pleased with the market.

The Opec kingpin's new oil minister, Khaled al-Falih, expressed confidence that the price recovery would continue.

"Everybody is very satisfied with the market. The market is rebalancing as we speak," he said.

At its December meeting, Opec abandoned its group production target of 30 million barrels per day, which in any case was being flouted. Opec output currently is estimated at 32 million barrels per day, roughly a third of the world's oil.

Andy Lipow of Lipow Oil Associates said the market breathed "a sigh of relief" after Saudi Arabia "indicated it would not flood the market with additional quantities of oil."

That, combined with the US declines in crude and petroleum products, "helped stabilize the oil market today and recover from its early losses," he said.

AFP