Oil prices rose on Thursday, supported by an unexpected draw in US gasoline inventories, although bloated crude supplies meant that fuel markets remain under pressure.
Benchmark Brent crude was up 50 cents a barrel at $55.62 per barrel by 0945 GMT. US light crude was 50 cents higher at $52.84 a barrel.
The US Energy Information Administration (EIA) said on Wednesday gasoline inventories fell by 869,000 barrels last week to 256.2 million barrels, versus analyst expectations for a 1.1 million-barrel gain.
The fall in gasoline stocks suggested US consumption was stronger than expected, and may be healthy enough to support prices at time when most fuel oil markets are very well stocked.
“US gasoline draws are supporting prices today,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. “They are an indication of stronger US demand.”
The EIA report also said that US commercial crude inventories rose by 13.8 million barrels to 508.6 million barrels.
US bank Goldman Sachs said high fuel inventories and rising US crude production meant oil markets would be over-supplied for some time, but that they would drain gradually.
“We do not view the recent excess US builds as derailing our forecast for a gradual draw in inventories, with in fact the rest of the world already showing signs of tightness,” the bank said in a note to clients.
“The draws that we expect will start from a high base,” the bank said. “US production has also rebounded ... and we view the faster shale rebound as creating downside risk to our 2018 WTI price forecast of $55 per barrel, but not to our expectation that the global oil market will shift into deficit in 1H17.”
High oil inventories have been undermining efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to tighten the market by cutting production.
OPEC and other big exporters have agreed to trim output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market.
Saudi, Venezuela review oil market conditions
Meanwhile, Saudi Arabia’s energy minister Khalid al-Falih met Venezuela’s foreign and energy ministers in Riyadh on Thursday to review oil market conditions and the importance of keeping them stable, state-run Saudi news agency SPA reported.
Falih discussed with Venezuela's foreign minister Delcy Rodriguez and oil minister Nelson Martinez their commitment to the agreement between OPEC and non-OPEC producers to cut oil output, SPA said.
The Saudi minister noted there had been continuous cooperation between the two countries for many years. The Venezuelan delegation's visit is part of a tour to OPEC and non-OPEC countries to coordinate and discuss oil market conditions.