Oil ends session up; misses $50-target amid profit-taking
By Barani Krishnan
NEW YORK (Reuters) - Oil prices rose about 2 percent on Wednesday after the U.S. government reported a larger-than-expected drop in crude inventories, but profit-taking after the data kept prices below the $50 a barrel level that oil bulls had been hoping for.
The U.S. Energy Information Administration said crude inventories fell 4.2 million barrels in the week to May 20. While the decline was steeper than the 2.5 million barrels forecast by analysts in a Reuters poll, it was not as much as the 5.1 million expected by trade group American Petroleum Institute. [EIA/S] [API/S]
Crude futures fell briefly after the EIA data showed the steepest weekly drop in seven weeks, then consolidated and traded at the lower end of the day's gains.
Brent LCOc1 settled up $1.13, or 2.3 percent, at $49.74 a barrel. Prices climbed as high as $49.96 in post-settlement trading.
U.S. crude's West Texas Intermediate (WTI) CLc1 settled 94 cents higher at $49.56, after peaking at $49.62, a seven-month high.
Profit taking heading into the U.S. Memorial Day weekend also pressured prices, traders said.
Oil bulls have been hoping in recent weeks that crude would rise to $50 a barrel or more, after global crude flows declined nearly 4 million barrels per day due to wildfires in Canada's oil sands region, a near economic meltdown in OPEC member Venezuela and a spate of violent attacks against the Libyan and Nigerian energy industries.
"While we do feel the rally could go slightly further and test the psychological $50 level, we also think the rally has been priced in, especially with the impact expected from Canadian wildfires," said Tariq Zahir, crude trader and portfolio manager at Tyche Capital Advisors in New York. Continued...