Oil ends down, then jumps on chance of another U.S. crude draw

Tue Oct 4, 2016 5:20pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil settled down on Tuesday after a surging dollar offset optimism over planned OPEC output cuts, before a report suggesting another weekly drop in U.S. crude stocks took prices up again post-settlement toward four-month highs.

The American Petroleum Institute (API), a trade group, reported that domestic crude inventories likely fell for a fifth straight week, declining by 7.6 million barrels. [API/S]

The U.S. government's Energy Information Administration (EIA) will report official stockpile numbers on Wednesday. Analysts polled by Reuters expect the EIA to report a stock build of 2.6 million barrels for the week ended Sept. 30. [EIA].

If the EIA reports another drawdown, "it means we can't take for granted that we're going to be seeing builds for this time of year, even though it's traditionally what we see", said Matt Smith, analyst at Clipperdata, a New York-based firm that tracks oil shipments into the United States.

"Refinery runs are higher than they were this time last year and so, we are still seeing more crude being consumed on a relative basis," Smith added.

Brent crude LCOc1 settled down 2 cents at $50.87 a barrel, after rising to $51.37 during the session, its highest since June 10.

U.S. West Texas Intermediate (WTI) crude CLc1 closed down 12 cents at $48.69, after hitting $49.13 earlier, a peak since July 5.

The two benchmarks rose about 40 cents each on the API data, with Brent at $51.25 and WTI at $49.19 by 5:00 p.m. (2100 GMT)   Continued...

An oil pump jack pumps oil in a field near Calgary, Alberta, July 21, 2014. REUTERS/Todd Korol