U.S. oil inventories drop by 3.3 mln bbls

Oil prices have been under pressure in recent weeks as concern over rising USA shale output canceled out production cuts by OPEC and non-OPEC members.

Image: An oil platform off the California Coast.

USA crude inventories fell 3.3 million barrels last week, compared with analyst expectations for a decrease of 3.5 million barrels.

Brent crude settled 21 cents, or 0.4 percent, higher at $51.87 a barrel.

Elsewhere, Brent oil for October delivery on the ICE Futures Exchange in London dipped 8 cents to $52.49 a barrel.

Book-squaring ahead of the USA crude September contract’s expiry on Tuesday added to price gains, traders and brokers said.

A tropical storm, Harvey, is now advancing towards the oil producing facilities in the Gulf of Mexico, which is anticipated to disrupt output and keep the market tightened for the next few days. Both crude futures contracts rose more than 1 percent on Wednesday, also buoyed by potential output disruptions from the Gulf of Mexico storm.

“While not a major storm, this will at least serve as a drill for refiners along the coast, in our view”. Earlier in the day an oil official said it was shut again hours after reopening on Tuesday following a three-day pipeline blockade.

The support and upside momentum generated by the EIA report could hold prices steady to higher on Thursday.

USA crude oil production hit 9.53 million barrels per day (bpd) last week, its highest since July 2015 and up over 13 percent from their most recent low in mid-2016. The pace at which producers have been adding drilling rigs to boost output has slowed to a crawl.

Crude inventories fell by 3.3 million barrels in the week ending August 18 to 463.17 million barrels, down 13.5 percent from record levels last March.

us crude stocks fell last week and gasoline stocks were down as well, the Energy Information Administration said on Wednesday.

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