Oil prices edge up on falling US crude inventories, but global glut still weighs
Oil prices rose early on Wednesday on a fall in U.S. crude inventories, although analysts said that markets were still being weighed down by general oversupply.
Brent crude futures, the international benchmark for oil prices, were at $51.01 per barrel at 0023 GMT, up 21 cents, or 0.4 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $47.70 a barrel, up 15 cents, or 0.3 percent.
“API oil inventory data for last week was released showing a large 9.2 million barrel decline in crude inventories, while gasoline inventories showed a small build. The market took this as a mildly bullish report,” said William O’Loughlin, investment analyst at Rivkin Securities.
U.S. crude inventories fell by 9.2 million barrels in the week to Aug. 11 to 469.2 million, industry group the American Petroleum Institute said on Tuesday.
That compared with analyst expectations for a decrease of 3.1 million barrels.
However, gasoline stocks climbed by 301,000 barrels, compared with analyst expectations in a Reuters poll for a 1.1 million barrel decline.
Official Energy Information Administration (EIA) data will be published late on Wednesday.
More broadly, analysts said oil markets were still being weighed down, preventing them moving much higher than current levels.
“Above all, it is the ongoing fundamental issue of excessive supply that is continuing to weigh on oil prices. On this front, not a lot has changed despite the OPEC and Russia efforts recently. While these producers have tried to limit their oil output, U.S. shale oil continues to rise,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
The Organization of the Petroleum Exporting Countries together with non-OPEC producers like Russia has pledged to restrict output by 1.8 million barrels per day (bpd) between January this year and March 2018.
Offsetting much of that effort, however, U.S. oil production has soared by almost 12 percent since mid-2016 to 9.42 million bpd.
“The recent rise in drilling activity means more shale supply is coming on stream,” Razaqzada said