Oil settles up; extends gains as API reports U.S. crude draw

Tue Oct 18, 2016 6:41pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices settled up on Tuesday on expectations of OPEC output curbs, then extended gains in post-settlement trade as an industry group's data showed an unexpected draw in U.S. crude inventories last week.

Crude stockpiles fell 3.8 million barrels in the week to Oct. 14, the American Petroleum Institute reported. Analysts had expected an increase of 2.7 million barrels. [API/S]

The U.S. government's Energy Information Administration (EIA) will issue official inventory numbers on Wednesday. If the EIA confirms the decline, it would be the sixth draw in the last seven weeks. Each has surprised analysts.

"It'll certainly be another hard-to-understand situation if there's a draw, as the kind of low refinery run rates we have now call for a build," said John Kilduff, partner at New York energy hedge fund Again Capital.

Refinery run rates USOICR=ECI have been falling since September, reaching below 86 percent of capacity for the week ended Oct 7.

Brent crude LCOc1 settled up 16 cents, or 0.3 percent, at $51.68 a barrel. It rose to as high as $52.15 after the API data.

U.S. West Texas Intermediate (WTI) crude CLc1 ended the session up 35 cents, or 0.7 percent, at $50.29. In post-settlement trade, it got to $50.78.

Crude prices have gained some 13 percent since the Organization of the Petroleum Exporting Countries proposed on Sept. 27 its first output cut or freeze in eight years to rein in a global crude glut. The group gathers on Nov. 30 for its policy meeting.   Continued...

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016.  REUTERS/Nick Oxford/File Photo