Oil prices edged up in thin trading on Thursday after steep falls in the previous session, supported by a weaker dollar, positive economic data and a drawdown in U. S. crude stocks.
International Brent crude futures were trading up 4 cents at $53.04 a barrel at 0345 GMT after closing the previous session down 93 cents.
U.S. benchmark West Texas Intermediate crude oil prices gained 14 cents to $49.90 a barrel after ending down $1.16.
Crude oil inventories in the United States dropped 2.4 million barrels in the week that ended on Dec. 2, compared with analyst expectations for a draw of 1 million barrels.
But stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, increased by a hefty 3.8 million barrels last week, the most since 2009, according to data from the U.S. Energy Information Administration on Wednesday.
“Oil prices are being supported by a raft of factors including underlying strength in the U.S. economy shown in better than expected factory and nonfarm payroll data and Chinese regulators’ attempts to cut excess supply in steel and other industries,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.
“While OPEC’s decision to curb output is grabbing the headlines traders feel this should be balanced against a lot of more positive economic data,” he said.
Oil prices have rallied since the Organization of Petroleum Exporting Countries (OPEC) and Russia reached a landmark agreement last week to cut production to erode a global supply overhang and prop up prices.
The U.S. dollar index fell as Treasury bond yields eased and as investors eye next week’s Fed meeting.
“A slightly weaker U.S. dollar is also supportive of oil prices,” McCarthy said. A weak dollar makes dollar-denominated oil less expensive for importing countries.
But doubts remain over whether OPEC will be able to comply with output cuts and whether those curbs will be enough to rebalance markets.
“Talk about OPEC compliance worries is a bit of a red herring. As in the past, OPEC compliance/non-compliance is a known unknown. What the crude rally really needs is new news to reinvigorate a speculative market already positioned long,” said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.
OPEC and non-OPEC oil producers will meet again this weekend in Austria’s capital to discuss the details of last week’s agreement, which aims at an overall reduction in output of around 1.5 million barrels a day.
“Oil markets might see a pick-up in volumes as we enter the European trading session,” McCarthy added.
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