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Oil Climbs Above $49 as US Crude Stockpiles Fall

May 17, 2017 at 17:43 by Andrew Moran

Oil prices rallied on Wednesday as they reach their highest level since the end of April. New government data highlighted a dip in US crude stockpiles as refineries increased output last week.

June West Texas Intermediate (WTI) crude futures climbed $0.50, or 1.03%, to $49.16 per barrel at 17:29 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are trading at three-week highs as oil continues to rebound.

Brent, the international benchmark for oil prices, also rallied midweek. July Brent crude futures rose $0.63, or 1.22%, to $52.28 a barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), US crude stockpiles tumbled by 1.9 million barrels to a total of 520.8 million in the week ending May. This is down from initial estimates of 2.4 million barrels. Gasoline stockpiles dipped by 413,000 barrels, down from expectations of 731,000 barrels. Distillate stockpiles decreased by 1.9 million, up from early projections of 1.1 million barrels.

The American Petroleum Institute (API) estimated on Tuesday that US crude stocks jumped by 882,000 barrels.

Oil futures are being further supported by reports that Saudi Arabia and Russia want to extend the six-month agreement among Organization of the Petroleum Exporting Countries (OPEC) nations. Moscow and Riyadh officials believe that the supply cuts of 1.8 million barrels per day (bpd) should be stretched until March 2018. OPEC members will hold an official meeting in Vienna on May 25.

With Saudi Arabia and Russia joining the likes of Kuwait, Iraq, Oman, and Venezuela, analysts believe that an increased production cut could be agreed upon.

Despite OPEC nations reaching full compliance, global supplies remain high, which is being blamed on US oil firms taking advantage of higher crude prices. US oil output has spiked 10% since the middle of last year.

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