Oil resumes advance as US industry data shows inventory drop

[HONG KONG] Oil resumed its advance as weekly industry data signaled US crude stockpiles declined, trimming a supply glut.

Futures rose as much as 1.3 per cent in New York after slipping 0.3 per cent Tuesday. Inventories dropped by 7.6 million barrels last week, the American Petroleum Institute was said to report. Energy Information Administration data Wednesday is forecast to show stockpiles increased.

A deal between Opec and non-members could trim output by 1.2 million barrels a day and boost prices by as much as US$15 a barrel, according to Venezuela's oil minister.

Oil has advanced about 10 per cent since the Organization of Petroleum Exporting Countries agreed last week to cut production for the first time in eight years.

Opec, which pumped at a record in September, will decide quotas for the group's members at an official meeting in Vienna on Nov 30. Hurricane Matthew is heading for the US and may disrupt East Coast fuel shipments.

"While the surplus is declining, high inventories will probably keep prices from climbing too far," David Lennox, a resources analyst at Fat Prophets in Sydney, said by phone. "The market will be looking forward to the November Opec meeting and waiting for any details on quotas."

West Texas Intermediate for November delivery rose as much as 61 US cents to US$49.30 a barrel on the New York Mercantile Exchange and was at US$49.18 at 8:27am in Hong Kong.

The contract lost 12 US cents to US$48.69 Tuesday after climbing 9.3 per cent the previous four sessions. Total volume traded was at about 13 per cent above the 100-day average. Prices advanced 7.9 per cent last month.

Brent for December settlement gained as much as 44 US cents, or 0.9 per cent, to US$51.31 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a US$1.53 premium to WTI for December.

BLOOMBERG