Published: Wed, May 24, 2017
Money | By Armando Alvarado

Crude posts further gain in Asia after suprise US stocks draw

Crude posts further gain in Asia after suprise US stocks draw

Nevertheless, the rise in gasoline inventories by 3.169 million barrels will worry the market.

As a result, United States crude oil production surpassed 9 million barrels of oil a day in February which is 500,000 barrels of oil a day higher than the low seen in September 2016. USA light crude CLc1 oil ended up $1.45 higher at $47.33 a barrel.

Oil prices edged up on Tuesday, driven by anticipation that an OPEC-led pledge to cut production would be extended beyond the first half of the year and into 2018, although overall high supply still weighed on markets.

The higher prices were a result of top exporter and de facto OPEC leader Saudi Arabia saying on Monday it would "do whatever it takes" to rebalance a market that has been dogged by oversupply for over two years, resulting in crude prices below $50 per barrel.

OPEC and other producers including Russian Federation have agreed to cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year to try to reduce a global fuel glut.

So far, however, there have been few signs that global markets are actually tightening as producers shielded their biggest customers, especially in Asia, from the cuts.

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"Oil prices are still finding it hard to recoup the losses they suffered last week", analysts at Commerzbank (Xetra: CBK100 - news) said in a note, adding the impact on prices from the fall in USA inventories had been underwhelming.

In the report, OPEC pointed to continued high compliance by its members with the supply deal and said oil stocks in industrialized nations fell in March - although they are still 276 million barrels above the five-year average.

U.S. crude stockpiles posted their biggest weekly drawdown since December as imports dropped sharply, the U.S. Energy Department said Wednesday, while inventories of refined products also fell.

"It is all about sentiment and perception", said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt. "The perception is that OPEC cuts are finally working", said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

In the U.S., crude stockpiles posted their biggest weekly drawdown since December last week as imports dropped sharply, while inventories of refined products also fell.

Investors are now waiting to see if those numbers are confirmed on Wednesday by official figures on weekly US crude and oil product inventories from the USA government's Department of Energy, due out at 1430 GMT.

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