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Oil prices drift as US crude output falls
[NEW YORK] Oil prices drifted sideways on Wednesday with US futures slightly higher but London slipping amid news that US oil output fell by another 100,000 barrels a day last week.
US crude and gasoline stockpiles also increased significantly - a bearish signal for the market - but US prices were supported by a major wildfire in Alberta, Canada, which has threatened production from the oil sands region.
US benchmark WTI crude for delivery in June finished the day at US$43.78 a barrel, up 13 cents from Tuesday.
In London, Brent crude for July dropped 35 cents to US$44.62.
Oil output sank last week by more than 100,000 barrels a day to its lowest level since September 2014 as producers cut back in the face of low import prices, the US Energy Department reported.
Domestic production dropped to 8.83 million barrels a day in the week to April 29, compared to 8.94 million a week earlier, and was down 800,000 barrels a day from the peak last June, department data showed.
US crude imports in the week rose by 110,000 barrels a day, showing the competing pressure from Saudi Arabia and other producers that have slashed prices to hold and build market share.
Meanwhile, US commercial crude inventories piled higher, rising 2.8 million barrels, and gasoline inventories mounted as well, as local supplies continued to outpace demand growth.
"We continue to tread water below our five-months highs," Gene McGillian of Tradition Energy said.
"The expectation that we are going to see further decline in US production levels and increased demand is keeping the market supported."
Wildfires are burning out of control in the Alberta oil sands region, which mines and ships heavy crude south to the US market.
"The reports of the wildfire in Canada started some worry that some production in Canada might be impacted," Mr McGillian said.
The monster fire around the Fort McMurray hub has forced tens of thousands of residents to flee.
Oil companies crucial to the region such as Suncor, Syncrude and Shell have reduced operations to facilitate the evacuation of non-essential employees.