Oil prices extend gains after drop in U.S. stockpiles

Prices surged on Wednesday after a slew of market reports and official data offered some hope that a near three-year global glut in oil is coming to an end, albeit more slowly than many anticipated.

A pump jack used to help lift crude oil from a well in South Texas’ Eagle Ford Shale formation stands idle in Dewitt County Texas. Photo: Reuters

Crude oil prices rose on Thursday in early Asian trading, extending gains from the previous session after official data showed U.S. stockpiles had eased from record highs.

Prices surged on Wednesday after a slew of market reports and official data offered some hope that a near three-year global glut in oil is coming to an end, albeit more slowly than many anticipated.

U.S. West Texas Intermediate (WTI) crude was up 28 cents, or 0.6 percent, at $49.14 a barrel by 0010 GMT, having surged 2.4 percent in the previous session to settle at $48.86, its first increase in eight days.

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Brent futures climbed 34 cents, or 0.7 percent, to $52.15. They had their first increase in seven days on Wednesday, gaining 1.7 percent.

The benchmarks have bounced off their lowest levels since the Organization of the Petroleum Exporting Countries (OPEC) agreed at the end of last year to cut crude production, with an initial surge evaporating as stockpiles remained high.

Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, the first weekly decline after nine straight increases.

Crude inventories fell 237,000 barrels in the week to March 10. Analysts had forecast an increase of 3.7 million barrels. [EIA/S]

The inventories have been closely watched by oil traders to determine whether the OPEC agreement to cut output is reducing the global glut.

Oil bulls were also encouraged after the International Energy Agency said in its monthly oil report that demand should overtake supply in the first half of this year.

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