Oil prices accelerated today after U.S. data showed a surprise decline in inventories, suggesting that a global glut may be ending after moves by OPEC to cut production.
Benchmark Brent crude oil LCOc1 was up 70 cents a barrel at $56.54 by 1025 GMT, recovering from a drop of 82 cents on Wednesday. U.S. light crude CLc1 was 70 cents higher at $54.29 a barrel.
Both benchmarks are near the top of relatively narrow $4 ranges that have contained trade so far this year, reflecting a period of low volatility since the Organization of the Petroleum Exporting Countries and other exporters agreed to cut output.
OPEC and producers including Russia aim to reduce production by around 1.8 million barrels per day (bpd) in an attempt to drain an oversupply that has kept prices depressed for more than two years.
So far OPEC appears to be sticking to its deal but other producers, notably U.S. shale companies, have increased output, helping swell stocks in the United States, the world’s biggest oil consumer.
U.S. gasoline and distillate fuel stocks also fell, the American Petroleum Institute (API) said.
According to Reuters, Tamas Varga, analyst at London brokerage PVM Oil Associates, commented oil prices could rally further if the U.S. government’s Energy Information Administration (EIA) also reports a fall in inventories when its data is published at 11 a.m. EST (1600 GMT) on Thursday and added:
Confirmation of the bullish set of inventory data from the EIA this afternoon will send prices to the upper end of the current trading range. If, however, the figures disappoint those who have gone long overnight and this morning will likely run for the exit.