Oil edges higher above
$52 before U.S. inventory report
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[August 09, 2017]
By Alex Lawler
LONDON (Reuters) - Oil rose further above
$52 a barrel on Wednesday ahead of a U.S. inventory report expected to
show crude stocks dropped for a sixth week, although gains were capped
by doubts about compliance with OPEC-led supply cuts.
Crude inventories last week fell by 7.8 million barrels, more than
expected, but gasoline stocks rose unexpectedly, data from the American
Petroleum Institute (API) showed on Tuesday before the release of
Wednesday's official numbers.
Brent crude <LCOc1>, the global benchmark, was up 34 cents at $52.48 at
1159 GMT, after two days of decline. U.S. West Texas Intermediate (WTI)
crude <CLc1> added 30 cents to $49.47.
Wednesday's focus will be on the U.S. government report at 1430 GMT to
see whether it confirms the figures from the API, an industry group.
Analysts expect crude stocks to have fallen by 2.7 million barrels and
gasoline by 1.5 million barrels.
"They are also likely to show a significant inventory reduction due to
lower imports," Commerzbank's Carsten Fritsch said of the Energy
Information Administration report.
"It seems to be toppish and prices are struggling to rise on bullish
news," he added.
A further drop in U.S. crude stocks would raise hopes that an OPEC-led
effort to wipe out a three-year, price-sapping supply glut is working.
The Organization of the Petroleum Exporting Countries, Russia and other
producers are cutting output by about 1.8 million barrels per day (bpd)
from Jan. 1, 2017 until March 2018.
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A worker at an oil field owned by Bashneft, Bashkortostan, Russia,
January 28, 2015. REUTERS/Sergei Karpukhin/File Photo
The deal has supported prices but an output recovery in Libya and Nigeria, OPEC
members exempt from the cut, has complicated the effort. U.S. shale oil drillers
have also ramped up production.
OPEC officials met on Monday and Tuesday in Abu Dhabi in an effort to boost
producers' adherence to the supply cuts, which has been high on average despite
relatively low compliance by Iraq and the United Arab Emirates.
In a statement after the meeting, OPEC said the conclusions reached would help
boost compliance. Still, it gave little detail and some analysts remained
"The statement on the OPEC website following the Abu Dhabi meeting was short on
substance," Vienna-based JBC Energy said.
Top OPEC exporter Saudi Arabia, keen to get rid of the glut, has shown one of
OPEC's highest rates of compliance and in September will cut crude allocations
to customers by at least 520,000 bpd, an industry source said on Tuesday.
(Additional reporting by Aaron Sheldrick; Editing by Dale Hudson and Susan
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