The dip in U.S. crude oil inventories comes after weeks and weeks of increasing oil production in the United States, growing from an average of 8.946 million bpd in the first week of January of this year and reaching an average of 9.780 million bpd for week ending December 8.
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By Tuesday 10:32am EST, WTI was trading up.40% at $57.47 per barrel, while Brent crude was trading up.54% at $63.25. Brent had traded as high as $63.91 earlier in the day but pared gains after Ineos, operator of the North Sea Forties pipeline, said the crack that shut it down had not spread.
US crude oil inventories were forecast to have fallen for a fifth straight week along with a probable fall in distillate stocks last week, a preliminary Reuters poll showed on Monday.
"This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least", said Stephen Brennock of oil broker PVM.
Ineos, the operator of the Forties pipeline, said on Tuesday it was moving forward with a preferred repair option and the timeframe for the fix remained two to four weeks starting from December 11, the date of the shutdown.
Oil ticked up after reports that a missile was sacked at Riyadh from Yemen, but pared gains after Saudi Arabia said it intercepted the missile and no casualties were reported. "With Opec's decision to extend cuts, we expect that OECD inventories will reach the five-year trailing average [2.83-billion barrels] by [the third quarter of 2018] and long-term average [2.7-billion barrels] by year-end 2018", Bernstein added.
The cuts have trimmed global oil inventories, and the latest weekly supply reports are expected to show a further reduction.
The American Petroleum Institute (API) reported a draw of 5.222 million barrels of United States crude oil inventories for the week ending December 15, marking three large draws in as many weeks.
Still, rising USA production is countering lower supply elsewhere.