Oil prices rose as much as 3 percent on Wednesday after a third surprise weekly drop in U.S. crude stockpiles boosted the demand outlook in the world’s largest oil consumer.
The dollar weakened .DXY after the Federal Reserve left U.S. interest rates unchanged, which also buoyed prices for dollar-denominated crude. [FRX/]
Another supportive factor was an oil workers’ strike in Norway, which threatened to cut North Sea crude output.
Prices jumped after the U.S. Energy Information Administration (EIA) stunned the market when it said crude inventories fell 6.2 million barrels last week. Forecasters in a Reuters poll had expected a 3.4 million-barrel build. [EIA/S]
U.S. crude stocks have slumped since 14.5 million barrels were drawn in the week to Sept. 2, when a storm disrupted imports to the U.S. Gulf Coast. It was the biggest weekly drop since 1999.
The U.S. drawdowns have contrasted with higher output by the Organization of the Petroleum Exporting Countries, even as OPEC was expected to agree with other crude exporters to freeze production in talks scheduled in Algeria next week.
Non-OPEC members have also been raising production, with Russia achieving record highs of above 11 million barrels per day.
Brent crude futures LCOc1 settled up 95 cents, or 2 percent, at $46.83 per barrel.
U.S. West Texas Intermediate (WTI) crude futures CLc1 rose $1.29, or 2.9 percent, to settle at $45.34.
Some traders, however, said U.S. crude stockpiles were still high and prices could come under pressure again.
“We are still very well supplied for this time of year,” said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in New York, referring to total U.S. crude stocks that stood at record seasonal peaks of nearly 505 million barrels.