Oil prices rise on U.S. stock draw, strong Japan data

May 20
10:19 AM 2015

Crude oil prices bounced back on Wednesday from steep falls in the previous session as industry data showed that U.S. crude stocks fell more than expected last week.

Brent futures LCOc1 rose 92 cents to $64.94 a barrel by 1431 GMT, after touching $65.02 earlier in the session. U.S. crude prices CLc1 rose 74 cents to $58.73 a barrel, easing back from an intraday high of $58.90.

On Tuesday oil fell over 3 percent on a dollar rally and concerns of a building glut, which Goldman Sachs said would lead to a return towards 2015 lows.

"The market came under a lot of pressure yesterday and it's not unusual to see a bit of a correction the day after," said Hans van Cleef, senior energy economist with Netherlands-based ABN Amro.

U.S. crude inventories fell by 5.2 million barrels last week, said industry group the American Petroleum Institute (API) said late on Tuesday. A Reuters survey of analysts had forecast a fall of 1 million barrels. [API/S] [EIA/S]

Official inventory numbers from the U.S. Energy Information Administration (EIA) are due at 1430 GMT today.

"The key for me is not so much that there are declines in inventories, it's that those declines are accelerating," said Michael Hewson, chief markets analyst at CMC Markets.

Prices also drew support from strong economic data from Asia. Japan's economy, the world's third largest, expanded at an annualised rate of 2.4 percent in the first three months of this year.

"Japan is one of the major importers of crude oil and growth in this region would definitely be favourable for crude demand," Singapore-based brokerage Phillip Futures said.

Unrest continued in Yemen, where Saudi-led forces intensified a bombing campaign against Iranian-allied Houthi rebels. While Yemen is a marginal producer of oil, it lies close to major shipping routes and shares a border with Saudi Arabia, the world's top oil exporter.

The United Nations will sponsor Yemeni political talks in Geneva on May 28, Secretary-General Ban Ki-moon said in a statement released on Wednesday.

But Yemeni Foreign Minister Reyad Yassin Abdulla said Yemen's exiled government might not attend because it had not been officially notified.

"We didn't get an official invitation. It's very short notice. If it happens, it shouldn't be on May 28," he said by telephone.

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