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Oil rises as forecasters see big draw in US stocks
[NEW YORK] Oil prices rose on Tuesday, touching a one-week high on expectations of a steep draw in US crude stocks, but edged off gains after Libya announced the reopening of pipelines after a two-year blockade ended recently.
Benchmark brent crude futures were up 40 cents, or 0.7 per cent, at US$55.32 a barrel at 1.29pm EST (1829 GMT) after hitting an intraday high of US$55.92. US crude futures rose 30 cents to US$52.42 a barrel.
Analysts polled by Reuters expected US crude oil inventories to show a draw of 2.4 million barrels in the week to Dec. 16.
The American Petroleum Institute, an industry group, will release its figures on Tuesday, ahead of official government figures due Wednesday. "There are expectations that we'll see supplies start to tighten by the end of the year," said analyst Phil Flynn of Price Futures Group in Chicago. "We'll get more heating oil demand this weekend and could see a drop in production next week and even last week because of the cold temperatures."
US gasoline futures were up 1.3 per cent at US$1.58 a gallon on the New York Mercantile Exchange. Traders expect low imports to result in an drawdown for products when the US Energy Department releases new data on Wednesday.
One outlying factor that has flummoxed some analysts has been a series of increases in US inventories at the key oil storage hub in Cushing, Oklahoma. Mr Flynn said this rise had been largely offset by a drop in Gulf Coast inventories.
Crude stocks fell more than expected last week, feeding expectations for another large drop in this week's figures.
The market pulled back in the early afternoon after Libya's National Oil Corp said pipelines from its western fields had been reopened. It expects to add 270,000 barrels a day in state production in the next three months. Protesters agreed last week to end a longstanding blockade.
Conflict and political disputes have cut Libya's production to just 600,000 barrels a day, far below output of 1.6 million before uprisings in 2011.
The Organization of the Petroleum Exporting Countries'recent agreement to cut supply did not include Libya, so its added production may undermine the group's efforts to reduce a glut.
The deal to cut global supply among Opec and non-Opec producers struck this month has boosted oil prices to 17-month highs. The gains have set up 2016 to be the first year Brent has risen since 2012.