Oil prices gain on 'bullish' US petroleum report

[NEW YORK] Oil prices rose on Wednesday after data showed a drop in US petroleum supplies and production.

US benchmark West Texas Intermediate for delivery in July rose 99 cents to finish at US$58.98 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in July gained US$1.01 at US$65.03 a barrel in London.

Data from the US Department of Energy showed US crude supplies fell by 2.4 million barrels in the week ending May 15, with daily production of oil dropping 112,000 barrels a day to 9.26 million barrels a day.

"I thought it was a pretty bullish report on a number of fronts," said Matt Smith, analyst at Schneider Electric.

The drop in petroleum production "wasn't just a tiny bit, it was a real movement there," he said.

Crude futures had fallen sharply on Tuesday on worries about excess supply and a rise in the dollar. A strong greenback makes dollar-priced oil more expensive, denting demand. Those concerns also kept crude prices from staging a bigger rally Wednesday.

"The report was supportive but at the same time we have the threat of additional dollar strength hanging over the market," said Saxo Bank analyst Ole Hansen.

Commerzbank said lofty supplies will act as an anchor on oil prices unless the Organisation of the Petroleum Exporting Countries changes policy at its June 5 meeting.

"The oil market will continue to be oversupplied until Opec significantly cuts its output, though there is little chance of this happening," Commerzbank said.

"The strategy of defending market shares upon which OPEC embarked at the end of November is likely to be confirmed at its meeting on 5 June."

AFP