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Oil Prices Head Higher On Large Crude Draw

09 April 2018

"While there was a surprise drop in USA stockpiles, we should note that they have been steadily rising since January this year", Min Byungkyu, a global market strategist at Yuanta Securities Co., said by phone in Seoul.

"There is speculation that the Saudis are going to lower prices for their Asian customers", said Bob Yawger, director of energy futures at Mizuho in NY.

The decline in United States stockpiles has boosted optimism that surging shale output may not thwart Organization of the Petroleum Exporting Countries's (OPEC) efforts to drain a glut. In the USA, where supplies have threatened to undermine OPEC's curbs, an industry report said inventories slid last week.

The energy minister of OPEC member Qatar told Reuters that organization and its allies should maintain supply cuts. The global benchmark crude traded at a $4.62 premium to June WTI. "While increasing U.S. supplies weigh on prices, we're seeing nice demand from both in and out of America, which eases concerns over bloated inventories".

Brent crude was 2 cents lower at $68 a barrel at 1248 GMT, and U.S. West Texas Intermediate crude was down 11 cents at $63.26 a barrel. Total volume traded on Thursday was about 23 percent below the 100-day average.

In the USA economy, meanwhile, the Labor Department reported employers added 103,000 names to their payrolls in March.

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Brent is now trading at $66.21 (Dh242.99) per barrel and the United States benchmark West Texas Intermediate at $62.34 per barrel.

Yuan-denominated oil futures on the Shanghai International Energy Exchange were little changed at 402.3 yuan a barrel after the September-delivery contract closed 3.4% lower on Tuesday. "Markets from equities to oil now seem to quickly brush off and recover as the trade dispute between the US and China continues".

Gasoline stocks fell by 1.1 million barrels, compared with analysts' expectations for a 1.3 million barrels drop.

The oil price drop came even as the American Petroleum Institute, an industry group, said late Tuesday that US crude inventories fell by 3.3 million barrels last week.

The fall had exceed $1 per barrel before losses were pared by USA data released mid-morning showing a reduction of 4.6 million barrels to 425.3 million barrels in the previous week's crude inventories.

Despite the supply cut agreement, Russian output rose in March to 10.97 million bpd from 10.95 million bpd in February, official data showed.

Oil Prices Head Higher On Large Crude Draw