Oil prices hold gains after U.S. crude inventory draw

Oil prices edged higher on Thursday, extending their 2 per cent gains from the previous session, after data showed U.S. crude stockpiles fell last week, while OPEC and its allies were seen complying with their pact to curb output in September.

West Texas Intermediate (WTI) crude CLc1 futures climbed 8 cents, or 0.2 per cent, to $41.12 a barrel at 0430 GMT, while Brent crude LCOc1 futures rose 7 cents, or 0.2 per cent to $43.39 a barrel.

Oil markets climbed for a third day despite resurgence in COVID-19 infections across Europe potentially denting fuel demand.

“The energy markets are certainly marching to their own drummer at the moment,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking, adding that recent oil price volatility may have attracted more trader positions.

The American Petroleum Institute industry group said U.S. crude, gasoline and distillate inventories all fell in the week to Oct. 9, according to a report released after market close on Wednesday.

Crude stockpiles fell by 5.4 million barrels, while distillate stockpiles, which include diesel and heating oil, fell by 3.9 million barrels. Those drawdowns were nearly double analysts’ expectations in a Reuters poll.

“Much of the fall is due to the effects of Hurricane Delta shuttering US production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.” Brent may retreat to $42.55 per barrel, after failing to break a resistance at $43.44,” Reuters technical analyst Wang Tao said on Thursday.

The US Energy Information Administration is due to release its weekly data on Thursday, a day later than normal following a public holiday.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC+, had 102 per cent compliance with their agreement to cut oil supply in September, two OPEC+ sources told Reuters ahead of a meeting of the OPEC+ technical committee on Thursday to review the oil market.