Oil prices climbed on Wednesday after weekly inventory data in the US showed a larger than expected draw down in crude stocks.
The data showed that for the week ending 19 May US commercial crude oil inventories decreased by 4.4m barrels from the previous week, when 1.8m barrels were drawn down.
The larger than expected decrease in inventories was largely due to weaker imports and growing refinery inputs – particularly into gasoline production as US petrol suppliers prepare for the pick up in demand attributed to the summer driving season.
US crude imports averaged 8.3m barrels per day last week, down by 296,000 barrels a day in the previous week.
Refineries pump up the volume
Refineries reported that crude inputs averaged 17.3m barrels a day last week, a rise of 159,000 over the previous week. Meanwhile, refineries operated at 93.5% of their operable capacity.
The data appeared bullish and initial reaction was for gains on commodity exchanges, with Nymex West Texas Intermediate up 0.1% at $51.55 a barrel, while Brent crude rose 0.2% to $54.35 a barrel.
Given the pick up in petrol production, the RBOB gasoline price eased 0.2% to 165.8 US cents per gallon.
The largely bullish data came ahead of the decision by Opec at Thursday’s meeting in Vienna that is expected to see the oil cartel keep current output cuts in place until the end of the first quarter next year.
Bjarne Schieldrop, chief commodities analyst at SEB, said that Opec's extended cuts and US inventory decreases were likely to be supportive and lift the Brent crude contract to $60 a barrel by the end of the year.
He warned, however: "The risk is that US shale oil production is stimulated to grow more, driving both 2018 and 2019 into strict surplus."
Last week Baker Hughes reported that the number of active US rigs drilling for oil climbed by 8 to 720 - the 18th weekly rise in a row.
Schieldrop added: "It may therefore be increasingly difficult to exit the cuts further down the road. It poses a downside price risk to 2018 unless some cuts are kept all through 2018 as well as 2019."