Oil prices climb on falling US output
World oil prices rose Thursday as sliding production eclipsed news of a bigger-than-expected jump in crude inventories in top consumer the United States.
Brent North Sea crude for delivery in October added 83 cents to stand at $48.38 a barrel in late afternoon deals in London.
US benchmark West Texas Intermediate for October won $1.20 to $45.36 per barrel.
The Department of Energy (DoE) reported that US commercial crude inventories soared by 2.6 million barrels in the week to September 4.
That was far more than market expectations for a 900,000-barrel gain, according to analysts polled by Bloomberg News.
News of surging stockpiles indicates weak demand and therefore tends to send prices heading lower.
However, the DoE also revealed that US oil production fell for the fifth week in a row, dropping 83,000 barrels to stand at 9.135 million bpd.
Stockpiles at the key Cushing hub meanwhile sank by 900,000 barrels.
"Strong economic data, strong demand for oil products, drop in oil production and drop in Cushing stocks seems to provide support to oil prices so far, despite the 2.57-million increase in US crude stocks," said Natixis analyst Abhishek Deshpande.
The DoE report was published one day later than normal owing to Monday's Labor Day holiday in the United States.
Prices had already fallen sharply Wednesday on expectations of another increase in US inventories, adding to worries about global oversupply.
The DoE had also predicted Wednesday that US crude-oil production would decline through the middle of next year in response to low prices, before picking up again in late 2016 on an expected recovery in prices.
US crude output fell 140,000 barrels per day in August from July. The government lowered its 2015 production estimate to 9.2 million barrels per day, 100,000 barrels lower than its month-ago forecast.
Even so, total US output this year is expected to be the highest since 1972.
"Part of the reason why prices have held up ... is due to the fact that there has been a small drop in US oil production," noted Forex.com analyst Fawad Razaqzada.
"US oil output fell by 140,000 bpd in August from July and is expected to decline further until it bottoms out in August 2016."
Investors are meanwhile keeping a close eye also on the US Federal Reserve's plans for interest rates as bank policymakers hold a meeting next week, with speculation they could announce a rise.
A hike in borrowing rates would likely push up the dollar, and with crude priced in the greenback it would make the commodity more expensive for anyone holding weaker currencies, denting demand.
© 2015 AFP