Oil ends higher as U.S. inventories drop for fourth week

Thu May 28, 2015 4:59pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices rose in choppy trade on Thursday, snapping two days of sharp losses, after data showed a fourth weekly drawdown in U.S. crude stocks.

The U.S. Energy Information Administration (EIA) said crude oil inventories USOILC=ECI fell by 2.8 million barrels last week, ahead of Monday's Memorial Day holiday, which unofficially kicked off the peak summer driving season in the United States.

It was a fourth straight week of declines in domestic crude stocks, contrary to the draw of 857,000 barrels forecast in a Reuters survey and the build of 1.3 million barrels estimated by the American Petroleum Institute.

Despite that, oil bulls could barely push the market higher right after the EIA data. U.S. crude was down most of the day and Brent was only up slightly, both rallying just before the close.

U.S. crude CLc1 settled up 17 cents, or 0.3 percent, at $57.68 a barrel, after plumbing a one-month low of $56.51. In post-settlement trade, at 4:30 p.m. EDT, it was up 43 cents at $57.94 a barrel.

Brent LCOc1 settled at $62.58, up 52 cents, or nearly 1 percent, after a six-week low at $61.24. It rose 84 cents in post-settlement trade.

Oil prices had fallen about 3 percent in the past two sessions on the strength of the dollar.

"My feeling is that demand for oil is growing as expected as we head into the summer, and if we can manage the headwinds posed by the dollar, we should be able to maintain an upward trajectory for prices," said Phil Flynn, an analyst at Price Futures Group in Chicago.   Continued...

A worker cycles past a petro-industrial complex in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter