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Oil rose for a second day as US crude stockpiles shrank, indicating the supply glut may be easing.
Futures advanced as much as 1.5 per cent in New York, extending a 1.7 per cent gain on Wednesday. US crude inventories shrank by 2.7 million barrels through May 15, the Energy Information Administration reported Wednesday. Stockpiles at Cushing, Oklahoma, the nation's biggest storage hub, dropped for a fourth week, data show.
Oil's rebound from a six-year low in March has faltered this month near $60 a barrel amid speculation that rising prices will encourage US production. Crude stockpiles near the highest level in 85 years will continue to weigh on the market, according to Goldman Sachs Group, Deutsche Bank AG and Citigroup Inc.
"Falling US inventories have helped prices to recover from losses earlier this week but it doesn't change the overall situation in the oil market," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. "The market is still oversupplied."
West Texas Intermediate for July delivery gained 39 cents to $59.37 a barrel in electronic trading on the New York Mercantile Exchange at 1:47 pm London time. The volume of all futures traded was about 37 per cent below the 100-day average for the time of day. Front-month prices have risen 11 percent this year.
US Supplies
Brent for July settlement climbed 36 cents, or 0.6 percent, to $65.39 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.02 to WTI.
Crude stockpiles in the U.S., the world's biggest oil user, fell a third week to 482.2 million barrels, according to EIA data. Supplies are about 100 million barrels above the five-year average for this time of the year. Inventories at Cushing, the delivery point for WTI, dropped 241,000 barrels to 60.44 million.
The nation's output fell by 112,000 barrels a day to 9.262 million a day as production declined in Alaska. Refinery utilization rose by 1.2 percentage points to 92.4 percent of capacity.
Prices may decline as drillers become more efficient and the Organization of Petroleum Exporting Countries refrains from cutting output, according to Deutsche Bank.
Brent is projected to average $62.50 a barrel for the rest of 2015, while WTI will average $57.50, Michael Lewis, Deutsche Bank's global head of commodities research, said in Singapore on Wednesday.
Oil workers in the U.K.'s North Sea, where Brent is produced, will hold a vote on an industrial action over pay, an employers' group said on Wednesday. Tommy Campbell, regional officer for the Unite union, said Thursday similar disputes in the past 10 years have been resolved without industrial action.
OPEC Output
OPEC has only been pricing out marginal producers for the past six months and there is no reason for the 12-member group to stop that market strategy now, Harry Tchilinguirian, the global head of commodity markets strategy at BNP Paribas SA, said at a Platts forum in London on Wednesday.
The group pumped 31.3 million barrels a day in April, exceeding its collective output quota of 30 million barrels for an 11th month, according to data compiled by Bloomberg. OPEC, which supplies about 40 percent of the world's oil, meets in Vienna on June 5 to discuss its production target.
With assistance from Laura Hurst in London.
