Oil up 4 percent on U.S. crude draw; Brent back above $50

Wed Jun 29, 2016 3:35pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices surged 4 percent on Wednesday, with Brent settling above the psychological $50 a barrel mark, after a larger-than-expected drawdown in U.S. crude inventories.

It was a second straight day of gains for oil, which has risen nearly 8 percent since Monday's settlement to recover almost all of what it lost after Britain's shock vote to exit the European Union.

Fading concerns over the so-called Brexit, potential for an oil workers' strike in Norway and a crisis in Venezuela's energy sector were among factors supporting Wednesday's rally.

While spot contracts in Brent and U.S. crude surged, the premium for longer-dated oil spiked too as traders bet crude in storage will fetch better prices in coming months.

The U.S. Energy Information Administration reported that crude stockpiles fell 4.1 million barrels in the week to June 24, the sixth consecutive week of drawdowns.

That was more than the 2.4 million barrels expected by analysts in a Reuters poll.

Brent crude futures settled up $2.03, or 4.2 percent, at $50.61 per barrel. It hit a near one-week high of $50.74 during the session.

U.S. crude's West Texas Intermediate (WTI) futures also closed up $2.03, or 4.2 percent, at $49.88. WTI's session high was $50.   Continued...

Petrol pump nozzles are pictured at a fuel station owned by M10-Oil company in Tver, Russia, June 1, 2016. REUTERS/Maxim Zmeyev