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Oil finds footing after US gasoline stockpiles drop
[NEW YORK] Oil prices stabilised on Wednesday as traders looked past an increase in US crude inventories to a welcome drop in gasoline supplies.
US benchmark West Texas Intermediate (WTI) for delivery in April rose 28 cents to US$32.15 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for April, the European benchmark, finished at US$34.41 a barrel in London, up US$1.14 from Tuesday's settlement.
Both WTI and Brent, which had fallen more than four per cent on Tuesday, were lower earlier in the session.
The market picked up as traders digested the US Department of Energy's latest petroleum report.
US commercial crude supplies rose by 3.5 million barrels in the week ending February 19 to 507.6 million barrels, the highest level on record.
The rise was only half as big as the 7.1 million barrels reported by the American Petroleum Institute late Tuesday.
The big lift to market sentiment was a drop in gasoline inventories of 2.2 million, larger than expected, said Bob Yawger of Mizuho Securities.
"It's the first time the gasoline storage has been down in 15 weeks. It does look like you have a pretty good demand number at this time of year," Mr Yawger said, reflecting the low gasoline prices at the pump.
US oil production also fell for a fifth straight week and is now 500,000 barrels per day less than in June, he noted.
Robbie Fraser of Schneider Electric downplayed any expectations that Opec might reduce output, after Saudi Oil Minister Ali al-Naimi said Tuesday that his country, Russia and others were focused only on achieving an output freeze at January's high levels.
"With meaningful Opec action appearing virtually impossible for the moment, oil prices are likely to come under further pressure as supply continues to substantially outpace demand," said Mr Fraser.