Brent crude oil rose above $50 per barrel for the first time since early June on Thursday, adding to gains made the previous session when falling U.S. crude and oil product inventories lifted the market.
Brent futures LCOc1, the international benchmark for oil prices, stood at $50.10 at 1257 GMT, 40 cents up from their last settlement. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.42 per barrel, 30 cents higher, reports Reuters.
Both benchmarks were trading at their highest since June 7 after rising more than 1.5 percent in the previous session on a report showing U.S. crude and fuel inventories fell last week.
A pumpjack drills for oil in the Monterey Shale, California
U.S. crude inventories USOILC=ECI dropped by 4.7 million barrels in the week to July 14, according to the Energy Information Administration, more than analysts’ forecast of a 3.2-million-barrel decrease.
Gasoline stocks fell by 4.7 million barrels, well above expectations for a 655,000-barrel drop. Middle distillate inventories fell by 2.1 million barrels, versus expectations for a 1.2-million-barrel increase.
“The marked reduction in gasoline and distillate stocks drove crack spreads to multi-month highs, which points to high crude oil processing and a further inventory reduction in the coming weeks,” Commerzbank said in a note.
Strength in global markets, and a euro trading near a 14-month high, also helped boost prices. Because oil trades in U.S. dollars, any decline in the greenback makes it cheaper for holders of other currencies.
“Technically, it is a key day,” said Olivier Jakob, managing director of PetroMatrix. “If we can sustain the break (above $50) … then we can start rallying a bit.”
Still, there are widespread concerns about high stocks and rising output despite cuts by the Organization of the Petroleum Exporting Countries and other producers.
U.S. oil stocks, at roughly 490 million barrels, remain well above the five-year average, while U.S. production C-OUT-T-EIA has increased by almost 12 percent since mid-2016 to 9.4 million barrels per day (bpd). The output from OPEC members Libya and Nigeria, exempt from OPEC-led cuts, has added to the surplus.
OPEC and non-OPEC producers are to meet in St. Petersburg, Russia on Monday to discuss oil markets. OPEC and its non-OPEC allies, including Russia, have pledged to cut production by 1.8 million bpd from January this year to the end of March 2018. A lack of compliance by some and the two exemptions have undermined the rebalancing effort, capping prices.