Oil up two percent to June highs after another U.S. crude draw

Wed Oct 5, 2016 3:55pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices settled up about 2 percent on Wednesday, hitting their highest since June, after the fifth unexpected weekly drawdown in U.S. crude inventories added to support on hopes that major producers will agree to cut output next month.

The U.S. Energy Information Administration (EIA) said crude stockpiles fell 3 million barrels last week, opposite of forecasts of analysts polled by Reuters for a build of 2.6 million barrels.

Since the beginning of September, U.S. crude stocks have plunged 26 million barrels, but inventories remain at their highest in this century, EIA data showed. [EIA/S]

PIRA Energy Group, an influential New York-based consultancy, said it expects the glut that brought crude prices crashing from above $100 a barrel over two years ago will be gone by the second quarter of 2017. It also believes OPEC kingpin Saudi Arabia is trying to sustain prices at $50-$60.

Oil has rallied 13 percent over the past six sessions after the Organization of the Petroleum Exporting Countries announced plans to limit output, its first in eight years, when it gathers for its policy meeting in Vienna in November.

Brent crude settled up 99 cents, or 2 percent, at $51.86 a barrel. It rose earlier to $52.09, its highest since June 10.

U.S. West Texas Intermediate (WTI) closed up $1.14, or 2.3 percent, at $49.83. The session high was $49.97, a peak since June 29.   Continued...

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