Oil prices inched higher on Thursday after data showed a further decline in U.S. oil storage levels and China reported better economic numbers.
Brent crude for July delivery recently rose 1.2% to $65.80 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July were trading at $59.62 a barrel, up 1.1% from Wednesday's settlement.
Oil prices extended their gains from the previous trading session after the U.S. Energy Information Administration reported that U.S. oil inventories fell by 2.7 million barrels last week, the third draw in a row. U.S. oil output also fell, to below 9.3 million barrels a day, its lowest level since early February.
"In the midst of high refinery capacity, the decrease in crude inventories is expected and should continue to drop," said Daniel Ang, analyst at Phillip Futures.
Still, some analysts cautioned that the market continues to be well supplied with oil and prices could face yet another leg down.
"The reported inventory reduction cannot hide the fact that stocks of crude oil and oil products are higher—considerably so in the case of the former and noticeably in the case of the latter—than last year's levels, meaning that shortages should not occur," analysts at Commerzbank said in a report. "We continue to envisage downside risks for oil prices."
Stronger Chinese manufacturing data also gave a boost to oil prices on Thursday. The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, edged up to 49.1 in May from 48.9 in April.
China is the world's second-largest consumer and the largest net importer of oil and investors focus on its economic data as an indication for oil demand.
Meanwhile, market participants are turning their focus on the coming meeting next month of the Organization of the Petroleum Exporting Countries, said Michael Poulsen at Global Risk Manager. OPEC decided against cutting its output targets at its last meeting in November in a move that exacerbated the price rout.
"An output cut agreement looks rather unlikely as the members fight for market shares in a well-supplied market," Mr. Poulsen said. "Though no output cut is expected, some volatility could arise on comments from the various seminars and meetings around the summit."
Nymex reformulated gasoline blendstock for June—the benchmark gasoline contract—rose 0.9% to $2.0600 a gallon, while ICE gas oil for June changed hands at $600.50 a metric ton, up $7.75 from Wednesday's settlement.
(foxbusiness)
