Oil prices soar on falling USA inventories

Ann Santiago
July 29, 2017

Brent crude futures were down 16 cents, or 0.3 percent, at $50.81 a barrel at 0536 GMT, after rising about 1.5 percent in the previous session.

After a somewhat weak start to the Thursday session, oil prices rose to eight-week highs by noon, boosted by a stronger-than-expected inventory draw in the US and pledges by leading producers in the Middle East that they would cut supplies to the global market in earnest. The US West Texas Intermediate also increased and was sold at $48.85 United States dollars a barrel.

The 7.2 million barrel decline in crude inventories in the week ending July 21 was well above the 2.6 million barrel forecast. Oil rigs in Canada now stand at 129, up 60 on the year.

Oil prices were also supported by Saudi Arabia's pledge to cap its exports earlier this week.

US shale producers including Hess Corp, Anadarko Petroleum and Whiting Petroleum this week announced plans to cut spending this year as a result of low oil prices.

Fellow members of the Organisation of Petroleum Exporting Countries (OPEC) Kuwait and UAE have also promised export cuts.

"The bullish inventory report this week has helped confirm the declining trajectory of global inventories", said Sarp Ozkan, analyst at Drillinginfo.com.

US crude and gasoline inventories fell much more steeply than expected this week and the world's biggest oil exporter Saudi Arabia said it would further reduce oil output in August.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices.

Investors were eyeing an update on the US rig count expected later on Friday to assess any signs of a slowing down in drilling activity.

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