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[LONDON] Oil extended gains toward US$46 a barrel as US industry data showed crude and gasoline stockpiles declined.
Futures advanced as much as 2.2 per cent in New York after rising 1.8 per cent in the previous two sessions. Crude inventories fell by 8.13 million barrels last week, the American Petroleum Institute was said to report. If the decline is replicated in government data Wednesday, it would be the biggest decrease since September. Gasoline supplies shrank by 801,000 barrels, the API said.
Oil remains in a bear market amid concern expanding global supply will offset curbs by the Organization of Petroleum Exporting Countries and its partners. The Energy Information Administration cut its estimate for 2018 US production to below 10 million barrels a day, the first time the government agency has lowered its forecast since it started making the projections in January.
"The wave of optimism is gathering strength this morning after the API reported a sharp drawdown in US fuel supplies," said Stephen Brennock, an analyst at PVM Oil Associates Ltd in London.
West Texas Intermediate for August delivery added as much as 98 US cents to US$46.02 a barrel on the New York Mercantile Exchange, and was at $45.92 at 9.27am in London.
Total volume traded was about 12 per cent above the 100-day average. Prices increased 64 US cents to US$45.04 on Tuesday.
Brent for September settlement climbed as much as 91 US cents, or 1.9 per cent, to US$48.43 a barrel on the London-based ICE Futures Europe exchange. Prices rose 64 US cents to US$47.52 on Tuesday. The global benchmark traded at a premium of US$2.24 to September WTI.
An EIA report Wednesday is forecast to show US crude stockpiles dropped by 2.45 million barrels, according to the median of 10 analyst estimates in a Bloomberg survey. Supplies remain more than 100 million barrels above the five-year average.
"We expect another downswing if the EIA data won't confirm last night's API data," said Jan Edelmann, an analyst at HSH Nordbank AG in Hamburg.
"Investors have begun to assume the worst in their supply-demand balances, particularly on US activity."