Oil prices lifted by US production decline

[LONDON] Oil prices rose on Wednesday after the US government's Energy Information Administration (EIA) reported a decline in US production.

Brent crude for June delivery was up 66 cents at US$62.74 a barrel by 1358 GMT, after touching an intraday low of US$61.39.

US crude for June delivery was up 20 cents to US$56.81 a barrel, after reaching a low of US$55.73 earlier in the session.

The EIA said on Wednesday that US production declined by 18,000 barrels per day (bpd) last week, a fall of 0.19 per cent.

"It's another decline in production and the market is certainly anxiously awaiting more of those, at least people who are on the long side," said Dominick Chirichella, senior partner at New York's Energy Management Institute.

US crude stocks, however, rose by 5.3 million barrels last week, higher than the 2.9-million-barrel build expected by analysts in a Reuters survey, to a record 489 million barrels.

Stocks at the key delivery point of Cushing, Oklahoma rose by 789,000 barrels, the EIA said. Energy markets intelligence firm Genscape said tanks at Cushing were nearly 80 per cent full.

John Kilduff a partner at New York's Again Capital, also pointed to a draw in gasoline stocks supporting prices. "Gasoline demand continues to be strong, as well, with the 9.0 million bpd implied demand approaching summer-like levels," he said. "Prices will likely key off of the supportive aspects of the report more than incredible amount of crude oil inventories."

Prices also drew support from continued fighting in Yemen, despite Saudi Arabia saying on Tuesday it was ending a month-long campaign against the Iran-allied Houthi rebels. Yemen sits on shipping lanes used to transport oil from the Arab Gulf to Europe via the Suez Canal.

The White House said on Wednesday that Yemen remains unstable and much more work needs to be done in the region.

A new bull market might arrive much sooner than expected given the huge scale of capital and workforce withdrawal in the sector, a former boss of BP said on Wednesday.

REUTERS