Oil prices higher as US stockpiles drop

Oil prices higher as US stockpiles drop

Oil prices higher as US stockpiles drop

At around 0400 GMT, US benchmark West Texas Intermediate for delivery in September was down 25 cents, or 0.54 per cent, at Dollars 46.33 and Brent crude for October fell 35 cents, or 0.75 per cent, to USD 48.88 a barrel.

Some traders and investors cautioned that crude futures, which slipped into bear market territory in early August after falling 20 per cent from this year's highs in June, were looking overbought. Prices gyrated around that level before eventually breaking higher.

Traders said that profit-taking following recent rallies was weighing on prices amid expectations that weekly US EIA oil inventory data due later in the day would show the glut in crude and oilproducts supplies had widened.

Around 1100 GMT, US benchmark West Texas Intermediate for delivery in September was down 43 cents at $46.15 a barrel.

Oil jumped into bull market territory as USA trading took off Thursday, completing the turnaround from a bear market dive in just three weeks as falling stockpiles and talk of an OPEC output cap keep fueling gains.

The progress in crude prices follows speculation that OPEC members may be discussing a production freeze in their meeting next month, after a rise of almost 20% in only two weeks for the same reason. Optimism that Russia, Saudi Arabia and other major energy producers would agree to freeze production at the Doha Summit in April supported a months-long rally in crude prices.

"The market is totally dominated by short speculators facing OPEC talk", SEB commodities strategist Bjarne Schieldrop said. The U.S. oil drilling rig count has also risen without pause for seven weeks, signaling more production ahead.

"We forecast fuels consumption in Indonesia, Thailand, Pakistan, Vietnam and the Philippines to grow from 3.92 million barrels per day (bpd) in 2015 to 4.49 million bpd by 2020", it added. Saudi-based industry sources said earlier in the year they expected the kingdom's output to edge near record highs to meet summer demand for power. Any verbal intervention from Saudi Arabia about restoring market balance is likely to push prices higher, while any news that Iran will not cooperate in a production freeze could drive prices back down.

That said, Angola's crude oil exports are set to fall by 366,000 bpd in October to a 10-year low of 1.43 million bpd as a key grade enters maintenance, a provisional loading programme showed on Tuesday.

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