Oil rises after industry report points to massive inventory draw - BNN Bloomberg

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Oil resumed a rally after an industry estimate pointed to a huge drawdown in U.S. inventories, adding to signals the market is tightening.

West Texas Intermediate climbed near US$82 a barrel, though pared an earlier gain of as much as 1.3 per cent. The American Petroleum Institute reported that nationwide crude stockpiles plunged 15.4 million barrels last week, according to people familiar with the figures. If confirmed by government data later Wednesday, that would be the biggest draw in volume terms in figures going back to 1982.

The API estimates also pointed to another drop in crude holdings at the key storage hub at Cushing, Oklahoma, as well as declines in inventories of gasoline and distillates. Crude soared last month after the Organization of Petroleum Exporting Countries and allies including Russia cut supplies in a bid to lift prices. That's spurred calls from players including BP Plc that the market is set to strengthen in the coming months.

“The visible tightness has convinced the market that announced cuts are not just empty rhetoric,” said Nitesh Shah, an analyst at WisdomTree. “Market optimism that we are nearing the end of a rate tightening cycle and that an economic soft-landing could easily be achieved has also helped oil prices gain.”WTI for September delivery gained 0.8 per cent to US$82.03 a barrel at 10:10 a.m. in London.Widely-watched metrics are strengthening, with the gap between the U.S.

 

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