Oil prices driven higher by drop in inventories

Posted On 12 May 2016

An unexpected decline in US crude inventories last week helped drive up oil prices, according to a report issued by the US Energy Information Administration report on Wednesday.

According to the EIA data, crude stockpiles declined by 3.4m barrels, compared with expectations for a slight increase. It was the biggest draw since early April.

The data helped drive Brent crude up by 4.6 per cent to settle at $47.60 a barrel, its highest finish since April 29. US West Texas Intermediate was 3.2 per cent higher at $46.09.

Oil had seen choppy trading earlier in the session as participants weighed the risk of short-term supply cuts due to developments in Nigeria and Canada against the threat of Saudi Arabia increasing oil production to maintain market share.

Oil futures were up. July Brent crude rose by more than 3.5 per cent to $47.12 a barrel while Nymex June WTI added 3 per cent to $46.01 a barrel, erasing earlier losses.

Oil prices have rebounded by almost 70 per cent from their January lows.

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