Thursday, 8 September 2016

Oil Extends Gains after Big U.S. Crude Stock Draw

Oil prices rose more than 1.5 percent on Thursday after U.S. industry data showed a large drawdown  
in crude stocks, reflecting the temporary impact of an Atlantic storm. U.S. crude stocks fell 12.1 million barrels last week, data from the American Petroleum Institute showed after the market settled on Wednesday, compared with expectations for an increase of around 200,000 barrels. Benchmark Brent crude oil was up 80 cents a barrel at $48.78 by 0820 GMT, after settling up 72 cents on Wednesday.
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U.S. light crude was up 90 cents at $46.40 a barrel, having ended the previous session up 67 cents. U.S. crude stocks have been at record highs in the last two years, thanks partly to a shale boom that has boosted output. But Tropical Storm Hermine, which threatened the Gulf Coast refining region last week before moving to the U.S. East Coast, led to the loss of U.S. oil production.  

The U.S. government said on Aug. 29 that 11.5 percent of Gulf of Mexico output was shut in as a precautionary measure. "The big crude draw was a temporary move," said Tamas Varga, analyst at London brokerage PVM Oil Associates. "The big picture is bearish. The API stats are only a road bump on the way down." Oil was also buoyed by robust trade data from China, which showed its crude imports in August surged by nearly a quarter from a year ago to the second-highest amount ever, driven by independent refiners as they rushed to cash in on low oil prices before import quotas expire in December.  

Oil hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Prices have since fallen due to uncertainty over a possible deal by producer nations to freeze output, particularly after a meeting in Doha in April ended without such an agreement.

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