Brent crude and WTI: US oil prices soar to new 2016 high
US oil prices shook off earlier losses to hit their highest level so far this year, buoyed by a shock drop in US oil stocks.
West Texas Intermediate crude, the US benchmark, added one per cent to $46.7, having hit $46.9 earlier in the day. Brent crude, the global benchmark, rose 0.8 per cent to $48 per barrel this afternoon.
Data released yesterday by the Energy Information Administration showed US oil inventories fell by 3.4m barrels in the week ending 6 May. This beat analysts' expectations, with many penciling in a build of 80,000 barrels.
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It came after preliminary data from industry group the American Petroleum Institute showed US crude stocks rose by 3.45m barrels to a record high of 543.1m in the week ended 6 May.
"We were not totally surprised with the draw after the shut-in Canadian production," Tariq Zahir, managing partner at Tyche Capital Advisors, said.
Analysts, traders and market commentators had warned that the wildfires which swept across Canada earlier this week could wipe out more than one million barrels of its daily production capacity.
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This came against a backdrop of supply cuts and disruptions in the Americas, Asia and Africa in recent weeks, eating into the global oversupply.
Middle East oil exporter Kuwait said that recent price rises were justified, despite some analysts' suggestions that it isn't justified by underlying market fundamentals.
"Based on the decrease in production that has been shown in the last three weeks, I assume fundamentally the price represents the fall of production," Kuwait's acting oil minister Anas al-Saleh told Reuters.