Oil rises 2 percent amid expected draw in U.S. crude inventories

Wed Jan 4, 2017 4:50pm EST
 
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By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil prices rose nearly 2 percent on Wednesday on expectations U.S. crude inventories have dropped and on signs that the world's top oil exporters will stick to agreed output cuts that took effect this week.

Global benchmark Brent crude futures LCOc1 rose 99 cents, or 1.8 percent, to settle at $56.46 a barrel. U.S. West Texas Intermediate crude futures CLc1 gained 93 cents to end at $53.26 a barrel, also a 1.8 percent gain.

In post-settlement trade, crude rose slightly after industry group the American Petroleum Institute reported that crude stockpiles fell 7.4 million barrels in the week ended Dec. 30.

Weekly U.S. industry and government reports were expected to show a 2.2 million-barrel crude draw for last week, analysts polled by Reuters.

"We are expecting a draw," said Tariq Zahir, managing member of Tyche Capital Advisors in New York.

Oil companies likely drew down inventories in the final week of the year for tax-related reasons, which could lead prices to spike after the government's inventory data is released on Thursday at 11 a.m. (1600 GMT).

Both benchmarks recovered some losses from the previous day - when the U.S.-dollar .DXY hit a 14-year peak and knocked oil from 18-month highs - as the greenback dipped on Wednesday, making dollar-denominated fuel purchases in other currencies cheaper.

The market continues to try to consolidate below 12-month highs, said Gene McGillian, manager of market research at Tradition Energy.   Continued...

 
A gas station attendant pumps fuel into a customer's car at PetroChina's petrol station in Beijing, China, March 21, 2016. REUTERS/Kim Kyung-Hoon