Oil held gains as U.S. crude production tumbled the most in almost a year, easing pressure on OPEC-led efforts to drain a global glut.
Futures rose 0.5 percent in New York after advancing 5.2 percent in the previous five sessions. U.S. production tumbled by 100,000 barrels a day last week, the most since early July, the Energy Information Administration said Wednesday. The decline was likely driven by field maintenance in Alaska and the impact of tropical storm Cindy. Crude stockpiles unexpectedly expanded while gasoline inventories fell a second week.
Oil in New York and London tumbled into a bear market last week on concerns that rising global supply will counter output cuts from the Organization of Petroleum Exporting Countries and its partners. U.S. crude inventories remain more than 100 million barrels above the five-year seasonal average.
“Demand is positive so it comes down to what happens on the supply side of the equation,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “With OPEC effectively sidelined, the swing factor for market sentiment is U.S. production. We’re likely to see further price gains in the coming days.”
West Texas Intermediate for August delivery was at $44.94 a barrel on the New York Mercantile Exchange, up 20 cents, at 7:51 a.m. in London. Total volume traded was about 12 percent below the 100-day average. The contract gained 50 cents to $44.74 on Wednesday. Prices are down 7 percent this month.
Brent for August settlement, which expires Friday, gained 20 cents to $47.51 a barrel on the London-based ICE Futures Europe exchange. The contract added 66 cents, or 1.4 percent, to $47.31 on Wednesday. The global benchmark traded at a premium of $2.58 to WTI.
U.S. crude output dropped to 9.25 million barrels a day last week, according to the EIA. Crude stockpiles rose by 118,000 barrels to 509.2 million, the first increase in three weeks. All 10 analysts surveyed by Bloomberg before the report had predicted inventories would decline.