Oil prices climbed on Thursday, with Brent rising above $61 a barrel as a surprise drop in US crude inventories and the prospect of further market-supporting action by OPEC and its allies offset some concern over the outlook for demand.
US inventories dropped by 1.7 million barrels in the week to Oct. 18, and one analyst said stocks could fall further in coming weeks. OPEC and its allies meet in early December and could, officials have said, opt to deepen supply curbs.
Brent crude <LCOc1> was up 39 cents at $61.56 a barrel by 10:25 a.m. ET (1425 GMT), having risen 2.5% on Wednesday. West Texas Intermediate (WTI) crude <CLc1> rose 31 cents to $56.28.
"We feel that even minor supportive headlines on the trade front or geopolitical developments could prompt an exaggerated price response in a market in which net speculative WTI length had dropped into the red zone," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Gains in stock markets also lent support to
oil prices, dealers said.
Wall Street opened higher, Asia cheered a one-year peak for Tokyo's Nikkei and MSCI All World index <.MIWD00000PUS> was at its highest since late July. [MKTS/GLOB]
Still, the recent truce in the US-China trade war is not an economic turning point and has done nothing to reduce the risk that the United States could slip into recession in the next two years, a Reuters poll of economists found.
In the latest sign of economic weakness, employment in Germany's private sector fell for the first time in six years in October, a survey showed.
Oil's gains on Wednesday were supported by the drop in US crude inventories as reported by the Energy Information Administration (EIA).
"The seasonal weakness in crude
oil processing now appears to have come to an end, and processing should increase again," Commerzbank analyst Carsten Fritsch said of the EIA report.
"All things being equal, this should result in further falling crude
Brent prices have risen 14% this year, supported by a supply pact among the Organization of the Petroleum Exporting Countries and its allies.
Since January OPEC, Russia and other producers have implemented a deal to cutAdding further price support, officials have said that extended supply curbs are an option to offset the weaker demand outlook for OPEC crude in 2020.
oil output by 1.2 million barrels per day until March 2020 to support the market. The producers meet on Dec. 5-6 to review the policy.