Oil dip after bumper gains

7th April 2016, Comments 0 comments

World oil prices nudged lower Thursday after rallying sharply the previous day following the first drop in US inventories for seven weeks.

Around 1100 GMT, US benchmark West Texas Intermediate (WTI) for delivery in May slid four cents to $37.71 a barrel.

Brent North Sea crude for June delivery shed five cents to $39.79 a barrel compared with Wednesday's close.

Prices had rallied Wednesday after the US government's Energy Information Administraion (EIA) reported that commercial crude inventories fell 4.9 million barrels in the week ending April 1.

That confounded market expectations for a gain of 2.85 million, signalling strong demand, and followed a 2.3-million-barrel increase the previous week.

The figures helped prices build on healthy gains that came on the back of comments from Kuwait that this month's crucial producers' meeting could yield an agreement to limit output, despite conflicting statements by participants.

The sharp drop in US crude reserves was, however, in line with separate data published Tuesday by industry body the American Petroleum Institute (API).

"Brent and WTI crude are both trading slightly lower at the moment having made strong gains on Wednesday after EIA confirmed what API indicated the day before," said Oanda analyst Craig Erlam.

"Oil inventories experienced their biggest fall since the start of the year, last week, against expectations of another decent increase."

The report is a key focus for traders because the United States is the world's top oil consuming nation.

Meanwhile, key producers led by Russia and Saudi Arabia are set to meet on April 17 in Doha to discuss the global supply glut that has hammered prices, with proposals put forward to freeze output.

There had been doubts that an agreement would be reached as signs of discord emerged but recent comments from Kuwait revived hopes for a deal.

"Kuwait... suggested that low oil prices are hurting everyone and a freeze is needed to set a floor for oil prices," said analyst Margaret Yang at traders CMC Markets in Singapore.

"With uncertainty remaining ahead of the talks ... oil price movements may remain choppy before any firm deal is made," she said in a note.

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© 2016 AFP

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