Oil Price Rises After Lower US Inventories

Crude futures rose modestly on Thursday after a larger-than-expected drawdown in U.S. crude stockpiles, with gains checked by a stronger dollar and position squaring ahead of the expiry of the front-month contracts in gasoline and diesel.

Oil has lost more than $10 a barrel over the past month, with global benchmark Brent nearing a six-month trough earlier this week and U.S. futures near four-month lows, amid a global glut, resurgent dollar and recent stock market tumble in China.

But Wednesday’s U.S. government data, showing an unexpectedly large weekly draw of 4 million barrels of crude, more than 20 times what analysts expected, brought the selloff to a grinding halt.

Brent LCOc1 was up 50 cents, or 1 percent, at $53.88 a barrel by 10:27 a.m. EDT (1427 GMT), extending its slight rise in the previous session.

U.S. crude CLc1 climbed 20 cents, or 0.4 percent, to $48.99, after an 81-cent gain on Wednesday.

“There are people still digesting the data from yesterday and that’s feeding into today’s sentiment, but you also have a stronger dollar to deal with,” said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza