Oil edges up as US crude stocks fall

Oil prices climbed more than 1 percent on Thursday due to a threatened strike in Nigeria and as traders cover shorts after sharp losses the previous day brought on by an unexpectedly large rise in USA stocks of refined fuels.

Brent futures LCOc1 were up 85 cents, or 1.4 percent, at $62.07 a barrel by 11:42 a.m. EST (1642 GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 was up 63 cents, or 1.1 percent, at $56.59.

The extension of the OPEC and allies' production cut deal through the end of 2018 is sending a stronger signal that the oil market rebalancing could speed up and send WTI oil prices to average $54.78 a barrel in 2018, up from a previous projection of $52.50, a Reuters poll of 30 analysts and economists showed on Wednesday.

Crude Inventories of US crude fell by roughly 5.6 million barrels for the week ended December 2, beating expectations of a draw of 3.4 million barrels.

The slightly higher prices also came after a big sell-off in late US trading.

"We had a nice run to the downside yesterday and it seems for now that it's "take your short profits soon and keep your longs for longer", Saxo Bank senior manager Ole Hansen said.


Gasoline inventories - one of the products that crude is refined into - rose by 6.8 million barrels, well above expectations for rise of 1.7 million barrels, while supplies of distillate - the class of fuels that includes diesel and - rose by about 1.7 million barrels, above expectations for a draw of 967,000 barrels.

PVM Oil Associates also said in a note that "the weekly data was not as bad as it seems at first sight". The net result is a 2.52-million barrel draw in total commercial oil inventories.

Apart from the production cuts, OPEC and its partners are hoping that robust demand growth will help them to cut down global inventories to their five-year average.

U.S. oil production last week surpassed the high water mark of this century, and may be the highest since the early 1980s or 1970s at 9.7 million barrels of crude produced each day last week.

Soaring U.S. output threatens to undermine efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation to bring production and demand into balance following years of oversupply.

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