Oil rises on US inventory draw as OPEC beckons

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Oil prices fell on Wednesday after industry data showed a surprise increase in USA crude inventories despite Opec-led output cuts that Saudi Arabia and Russian Federation want extended. In line with "stronger recent performance from the USA shale sector, we have revised upwards our expectation throughout 2017, and we now expect total USA crude production to exit the year 790,000 b/d higher than at the end of 2016, which is an upward revision of 100,000 b/d since last month's report".

Both benchmarks rose on Wednesday after news of a drawdown in USA crude inventories and a dip in US output.

Market watchers are growing more confident that the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation will extend output cuts of nearly 1.8 million barrels per day (bpd) until the end of March 2018. The U.S. Energy Information Administration said inventories fell 1.8 million barrels in the week to May 12 to 520.8 million barrels. Analysts have forecast a draw on inventories for the sixth week running, falling 2.4-million barrels. Market watchers expect them to extend output cuts of 1.8 million barrels a day until the end of March 2018.The OPEC-led group is trying to reduce a global crude glut in the face of rising production in the United State. An extension was due to be discussed at an Opec meeting on May 25.

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Higher oil prices should increase production temporarily in Wyoming. It cut its Brent price estimate for the second half of 2017 to $59 per barrel from $61 previously.

On Tuesday, the International Energy Agency said commercial oil inventories in industrialised countries rose 24.1-million barrels in the first quarter of 2016.

"The number of tankers storing oil is on the rise across offshore China, as facilities on land remain full".

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