Stockpiles Fall, Oil Prices Hold Gains

Oil prices rose on Wednesday, supported by a report showing a drop in U.S. crude inventories, a cut in Libyan exports and an OPEC-led deal to trim output.

Figures released Wednesday by the U.S. Energy Information Administration revealed U.S. commercial crude inventories fell by 1.2 million barrels in the week through Dec. 7, whereby analysts in a recent poll had expected a decrease of three million barrels.

The drop was also far less than the American Petroleum Institute indicated on Tuesday. API had reported that U.S. crude inventories dropped by 10.2 million barrels last week.

Oil prices briefly cut gains after the report, but rebounded to trade roughly in line with gains prior to the data release.

Brent crude, the global benchmark, rose 59 cents, or 1% to $60.79 U.S. mid-morning Wednesday. It has still fallen by almost a third since early October. U.S. West Texas Intermediate crude futures were at $52.16 U.S. per barrel, up 51 cents, or 1%.

Oil has been supported this week by the supply loss in Libya, which declared force majeure on exports from the country’s largest oilfield on Sunday after tribesmen and state security guards seized the facility.

The Libyan cutback follows last week’s decision by the Organization of the Petroleum Exporting Countries and some non-OPEC producers including Russia to cut supply by 1.2 million barrels per day (bpd) for six months from Jan. 1.