Singapore: Oil rose to $50 on Thursday as the market focused on a large draw in U.S. distillates inventories and stronger equity markets, shrugging off crude stocks at a 16-year high and a grim U.S. economic outlook.
A 3.4 million barrel fall in distillate stocks reported by the U.S. Energy Information Administration (EIA) on Wednesday helped push oil to a high of $51.30, before prices retreated following a weak economic outlook from the Federal Reserve.
U.S. light crude for May delivery rose 61 cents to $49.99 a barrel by 0202 GMT, after having settled 23 cents higher at $49.38 on Wednesday.
London Brent crude gained 57 cents to $52.16. “Distillates inventories showed a big drop and prices are rising today because of that, keeping last night’s direction,” said Ryuichi Sato, an analyst at Tokyo-based Mizuho Corporate Bank.
“But the market may turn bearish. Supplies fell, which is good, but demand is still not there.”
Aside from the distillates draw, the weekly stocks data continued to show weak demand.
The EIA reported a 1.7 million barrel rise in crude stocks, bringing them to a 16-year high, in line with expectations, and a 600,000 barrel increase in gasoline inventories, contrary to forecasts for a 1 million draw.
“A look at the charts for diesel stocks and days cover -- both still sky-high -- suggests that the follow-through should be bearish,” said Societe Generale in a report.