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Oil prices higher as US stockpiles drop
[NEW YORK] Oil prices edged higher on Wednesday as the weekly US inventories report showed significant declines in stockpiles of both crude and gasoline.
But the gains were mitigated somewhat as the US Energy Department data also showed a pickup in US crude production by 152,000 barrels a day, reversing a steady decline that had helped put a floor under world crude prices.
US benchmark West Texas Intermediate for delivery in September finished up 21 cents at US$46.79 a barrel.
In London trade Brent North Sea crude for October delivery rose 62 cents to US$49.85 a barrel compared with the close on Tuesday.
US crude stockpiles fell by 2.5 million barrels in the week to August 12, and gasoline stocks fell 2.7 million barrels, pointing to a modest strengthening of US demand.
"A solid draw to crude stocks, helped in large part by another large draw to the West Coast, has been a supportive element, as has a solid draw to gasoline. Refinery runs hit their highest level for the year to boot," said Matt Smith of ClipperData.
Crude prices have been rising since the beginning of the week after comments from both Saudi Arabia and Russia that Moscow could soon join in with the Opec cartel in discussing production limits.
Opec producers will meet in Algeria in September as the global oversupply continues to hit the budgets of most exporters.
Saudi oil minister Khalid al-Falih last week suggested that discussions could include actions to stabilise prices - widely seen as a suggestion that Opec could revive talks on trimming high output levels.
Analysts have voiced doubts, however, about a deal being struck.
"These oil summits have usually ended without an agreement, as was the case at an Opec meeting earlier this year," said OANDA market analyst Kenny Fisher.
"Iran, which has returned as a major producer after years of sanctions, scuttled that meeting and is unlikely to be agreeable to any cuts in production," he added.