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Oil rises off one-month lows struck after surprise stock build

Published 08/06/2017, 08:02
© Reuters. A general view shows an drilling rig at the Lukoil company owned Imilorskoye oil field outside the West Siberian city of Kogalym
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By Aaron Sheldrick

TOKYO (Reuters) - Crude futures edged up in early Asian trading on Thursday following heavy losses in the previous session after official data showed that U.S. inventories rose for the first time in 10 weeks, reawakening concerns of a supply glut.

U.S. crude futures were up 26 cents, or 0.6 percent, at $45.98 a barrel at 0651 GMT. On Wednesday, they closed down 5.1 percent, or $2.47 a barrel, at their lowest settlement since May 4.

Brent crude prices rose 34 cents, or 0.7 percent, to $48.40 a barrel, after falling 4.1 percent in the previous session, also to the lowest since May 4.

"We are at this stage holding the line nervously near the low levels" of Wednesday's session, said Ben Le Brun, market analyst at OptionsXpress in Sydney.

"The situation is complicated by the fact that we have got all these major political-economic watch events on the horizon," he added, referring former United States Federal Bureau of Investigation Director James Comey's congressional appearance, the European Central Bank's policy meeting and the UK general election, all later on Thursday.

Many investors are wary ahead of Comey's Senate appearance later in the day for any hints that U.S. President Donald Trump may have been engaged in obstruction of justice - an offence that could lead to impeachment hearings.

ECB policymakers are set to take a more benign view of the economy and will even discuss dropping some of their pledges to ramp up stimulus if needed, sources with direct knowledge of the discussions told Reuters.

None of those events "are directly related to oil but all of them could have an impact on the dollar and risk attitudes generally," Le Brun said.

In the United States, stocks of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, official data showed on Wednesday.

Crude inventories rose by 3.3 million barrels in the week ended June 2, compared with expectations for a decline of 3.5 million barrels, the Energy Information Administration said.

It was the first increase in 10 weeks and came as refineries eased off from record processing levels reached a week earlier. U.S. refiners are still producing at a very high rate.

© Reuters. A general view shows an drilling rig at the Lukoil company owned Imilorskoye oil field outside the West Siberian city of Kogalym

The data surprised analysts and undercut a growing view that inventories were finally showing steady progress toward drawing down to seasonal averages.

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