SINGAPORE
(Reuters) - Oil prices firmed on Wednesday to hold near eight-week highs hit in
the previous session, on expectations of a drawdown in U.S. stocks and as
a
rise in shale oil production shows signs of slowing.
Brent crude
futures LCOc1 rose 41 cents, or 0.8 percent, to $50.61 a barrel by 0617 GMT,
after rallying more than 3 percent on Tuesday.
U.S. West
Texas Intermediate futures CLc1 climbed 49 cents, or 1 percent, to $48.38 a
barrel.
U.S. crude
stocks fell sharply last week as refineries boosted output, while gasoline
inventories increased and distillate stocks decreased, data from industry group
the American Petroleum Institute showed on Tuesday.
Crude
inventories declined by 10.2 million barrels in the week ending July 21 to 487
million, compared with expectations for a decrease of 2.6 million barrels.
The market
has been buoyed by Saudi Arabia's announcement at a meeting of the Organization
of the Petroleum Exporting Countries (OPEC) and non-OPEC producers on Monday
that it would limit crude exports to 6.6 million barrels per day (bpd) in
August, down nearly 1 million bpd from a year earlier.
"This
has seen expectations of further drawdown in inventories increase," ANZ
said in a research note, referring to the Saudi plans.
Nigeria also
agreed to join a push to rein in production by capping or cutting its output
from 1.8 million bpd once it stabilizes at that level.
However, the
current uptrend in oil prices could be limited to the low $50 per barrel
region, according to Ric Spooner, chief market analyst at CMC Markets in
Sydney.
"As we
approach $50 and into the low $50s, that's a level that could attract increased
U.S. shale oil production if it stays around that level," he said.
On Monday,
Anadarko Petroleum Corp (APC.N) said it would cut its 2017 capital budget by
$300 million because of depressed oil prices, the first major U.S. oil producer
to do so, after posting a larger-than-expected quarterly loss.
Oil prices
have come under pressure from an oversupply of crude around the globe, brought
on in part by rising production from U.S. shale regions.
Indonesia's
energy minister said on Tuesday that Southeast Asia's top crude producer would
be open to rejoining the Organization of the Petroleum Exporting Countries
(OPEC) as long as it is not forced to curb its own crude oil production.
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