Oil prices recover as US crude stocks decline
Oil prices have recovered with the support of falling crude inventories in the US following a fall of more than 1% in the previous session, though high production rates continue to restrict gains.
Brent crude futures LCOc1 were trading at $50.44 per barrel, gaining 17¢, while the US West Texas Intermediate (WTI) crude futures CLc1 were up by 6¢ to $46.84 a barrel, reported Reuters.
Data published by the US Energy Information Administration (EIA) highlighted a fall in commercial crude oil inventory by nearly 13% from its peak in March to settle at 466.5 million barrels.
Rivkin Securities analyst William O'Loughlin was quoted by the news agency as saying: “If inventory declines continue at this pace, stocks will fall back below the five-year average in around two months.”
The Organization of the Petroleum Exporting Countries (OPEC) and other major crude producers have agreed to reduce output by 1.8 million barrels per day (bpd) by March next year, as part of a deal that started in January.
However, rising US output has largely undermined the effort to rebalance the market.
Automobile sales are also decelerating after a period of strong demand that was primarily driven by sales of more than two million cars per month in China, which further increased refinery activity during that timeframe.
The demand is anticipated to fall in line with a decline in vehicle sales, due to cars becoming increasingly fuel-efficient and manufacturers opting for alternative fuel sources.