Oil prices rose around 1 percent on Thursday, extending gains from the previous session after a surprise third consecutive weekly U.S. crude inventory draw tightened the market, Reuters reports.
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $45.81 per barrel at 0301 GMT (11:01 p.m. EDT), up 47 cents, or 1 percent, from their previous close. The contract had already gained as much as 3 percent the day before.
Prices jumped after a report from the U.S. Energy Information Administration (EIA) showed a 6.2 million-barrel drop in crude oil inventories last week to 504.6 million barrels. Forecasters in a Reuters poll had expected a 3.4 million-barrel build.
“Oil prices rose after EIA data showed U.S. crude inventories declined to the lowest level since February,” ANZ bank said in a note on Thursday. International benchmark Brent crude futures LCOc1 were also up, gaining 48 cents, or 1 percent, from their last close to $47.31 per barrel.
Brent was lifted by an oil workers’ strike in Norway, which threatened to cut North Sea crude output. A weaker dollar .DXY after the Federal Reserve left U.S. interest rates unchanged also supported oil prices as it makes dollar-traded fuel imports cheaper for countries using other currencies.
Analysts, however, said they expect oil prices to remain range-bound at relatively low levels with global output near record highs and surpassing consumption, adding that producer talks in Algeria next week were likely to change little.
The United Arab Emirates, a participating producer, said on Wednesday that the talks were aimed at consultations rather than deciding production restraint or even cuts.
“In a world of continued (U.S.) shale productivity gains that cause other oil producing regions around the world to become highly focused on cost competitiveness, we believe investors and companies should prepare for an environment of rangebound oil prices,” Goldman Sachs said in a note to investors published late on Wednesday.
In a clear illustration of the impact on the ground of an the oil market downturn, the waters around Singapore have become the dumping ground for hundreds of drilling and offshore oil support vessels that have become surplus to requirement in the current era of cheap crude.