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Oil prices climb on falling US crude output
[NEW YORK] World oil prices rose on Thursday as investors focused on a decline in US crude production instead of a bigger-than-expected jump in inventories.
US benchmark West Texas Intermediate for October leaped US$1.77, or 4.0 per cent, to US$45.92 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for delivery in October, the European benchmark, closed at US$48.89 a barrel in London, advancing US$1.31 (2.8 per cent) from Wednesday's settlement.
Both futures contracts bounced back from sharp falls on Wednesday as traders expected another increase in US commercial crude-oil inventories.
In fact, the Department of Energy's (DoE) weekly petroleum report released Thursday showed a much larger-than expected build in inventories, by 2.6 million barrels to 458.0 million barrels in the week to September 4.
But the market seized on the more bullish aspects of the report. US crude-oil production fell for the fifth week in a row, dropping by 83,000 barrels per day to 9.14 million barrels per day.
Though still high, the decline in US production was seen as potentially easing the global oversupply that has outstripped demand and sent prices diving more than 50 per cent since June 2014.
US stockpiles at the key Cushing hub sank by 900,000 barrels, to 56.4 million. Meanwhile, US demand for petroleum products rose about four per cent from a year ago.
"Strong economic data, strong demand for oil products, drop in oil production and drop in Cushing stocks seems to provide support to oil prices so far, despite the 2.57 million increase in US crude stocks," said Natixis analyst Abhishek Deshpande.