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WTI oil futures surge 3% after drop in U.S. crude inventories

Published 09/12/2015, 15:35
Updated 09/12/2015, 15:39
© Reuters.  Oil rallies after drop in U.S. crude stockpiles
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Investing.com - West Texas Intermediate oil futures extended gains on Wednesday, after data showed that oil supplies in the U.S. fell for the first time in 11 weeks last week.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories declined by 3.6 million barrels in the week ended December 4. Market analysts' expected a crude-stock rise of 252,000 barrels, while the American Petroleum Institute late Tuesday reported a supply drop of 1.9 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 423,000 barrels last week, compared to forecasts for a build of 725,000 barrels.

Total U.S. crude oil inventories stood at 485.9 million barrels as of last week, remaining near levels not seen for this time of year in at least the last 80 years.

Gasoline inventories increased by 0.8 million barrels, below expectations for a gain of 2.2 million barrels, while distillate stockpiles rose by 5.0 million barrels.

Crude oil for delivery in January on the New York Mercantile Exchange rallied $1.29, or 3.44%, to trade at $38.80 a barrel during U.S. morning hours. Prices were at around $38.15 prior to the release of the inventory data.

On Tuesday, Nymex futures dropped to $36.64, the lowest level since February 2009, before paring losses to close at $37.51, down 14 cents, or 0.37%.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for January delivery jumped $1.23, or 3.07%, to trade at $41.49 a barrel. A day earlier, London-traded Brent sank to $39.81, a level not seen since February 2009, before ending at $40.26, down 47 cents, or 1.15%.

The Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce an oil glut that has cut prices by more than 60% since June 2014. As a result, crude prices are expected to remain stubbornly low amid a glut of oversupply on global energy markets.

The 12-member group produced approximately 31.5 million barrels per day last month. Global crude production is outpacing demand following a boom in U.S. shale oil and as OPEC opted not to cut production in order to defend market share.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $2.69 a barrel, compared to $2.75 by close of trade on Tuesday.

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