Oil gains further as US tockpiles suffer

Oil extended gains above $49 a barrel as US government data showed an unexpected fall in crude stockpiles, the first decline this year.

Futures rose as much as 1.6 per cent in New York after advancing 2.4 per cent on Wednesday, snapping a seven-session decline. Crude stockpiles dropped by 237,000 barrels last week, according to an Energy Information Administration report. A Bloomberg survey had forecast a 10th weekly expansion. Iraq plans to increase output to 5 million barrels a day by the end of 2017, Oil Minister Jabbar Al-Luaibi said at a news conference in the southern city of Basra.

Oil last week broke below $50 a barrel for the first time since December as rising US supply countered output reductions by members of the Organisation of Petroleum Exporting Countries and other nations. While an Opec report on Tuesday showed Saudi Arabia’s production climbed back above 10 million barrels a day in February, it still remains below a ceiling set under the six-month cut deal that started on Jan. 1.

“Oil bulls will have breathed a collective sigh of relief yesterday as the stubborn climb of US crude stockpiles into record territory came to an unexpected halt,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

West Texas Intermediate for April delivery rose as much as 76 cents to $49.62 a barrel on the New York Mercantile Exchange and was at $49.41 at 10:08am in London. Total volume traded was in line with the 100day average. Prices climbed $1.14 to close at $48.86 on Wednesday after falling almost 11 per cent the previous seven sessions.