Oil jumps after surprise drop in U.S.
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[September 21, 2016]
By Amanda Cooper
LONDON (Reuters) - Oil prices jumped 2
percent on Wednesday after a surprisingly large drop in U.S. crude
inventories and as an oil services workers strike in Norway threatened
to cut North Sea output.
Brent crude futures <LCOc1> were up 91 cents at $46.79 per barrel by
1113 GMT, while West Texas Intermediate (WTI) crude futures <CLc1> rose
by 96 cents to $45.01 a barrel.
Oil took its cue from American Petroleum Institute (API) data which
showed a 7.5 million barrel drop in U.S. crude inventories to 507.2
million barrels, almost twice the fall expected by analysts.
"Oil's got its own pretty positive drivers at the moment. The API
surprise draw overnight is obviously leading to the question of whether
we are going to see the same in the official inventory today," CMC
Markets strategist Jasper Lawler said.
Official storage data is due to be published by the U.S. Energy
Information Administration (EIA) later on Wednesday.
Adding to the upward price momentum was an oil service workers strike in
Norway that could affect output from western Europe's biggest crude
Nevertheless, analysts said any gains could be tempered by caution ahead
of the Federal Reserve's Federal Open Market Committee (FOMC) decision
on interest rates later on Wednesday.
Economists do not expect a change in rates but any indication from the
Fed on the outlook for economic growth could have an impact on the
dollar, and in turn, on oil.
"I don't expect the Fed to do anything and I don't expect a 'hawkish
hold' either. But a bit of dollar weakness should support the backdrop
for oil," CMC's Lawler said.
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The Philadelphia Energy Solutions oil refinery owned by The Carlyle
Group is seen at sunset in front of the Philadelphia skyline March
24, 2014. REUTERS/David M. Parrott/File Photo
"Wednesday has become 'Big Wednesday' for oil traders, with not only
the FOMC but also the EIA crude inventory numbers out. Should they
(EIA) follow the unexpected drawdown like the API and we get no FOMC
rate hike, oil bulls may well have reason to be cheering after a
tough couple of weeks," Singapore-based brokerage Oanda said.
Key for the market is next week's meeting in Algeria between
producers from the Organization of the Petroleum Exporting Countries
(OPEC) and Russia to discuss measures to rein in oversupply,
including an output freeze at current levels, but analysts said they
did not expect significant results.
"Even with a freeze - which would still mean OPEC production is at
record levels - we will still be in an oversupplied market," said
Matt Stanley, a fuel broker at Freight Investor Services (FIS) in
(Additional reporting by Henning Gloystein and Mark Tay in
Singapore; editing by David Clarke)
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