Brent crude rises above $50 as US inventories decline

Oil prices surged on Thursday with Brent crude firmly above the $50-mark, after Energy Information Administration (EIA) weekly data revealed a larger-than-expected decline in US inventories.

The benchmark grade was last trading up 1.2 percent at $50.81 per barrel (bbl), while WTI crude gained 1.3 percent to reach $47.93/bbl.

US crude stockpiles decreased 5.2 million barrels in the week ending May 5, compared to the previous week, EIA said.

“At 522.5 million barrels, US crude oil inventories are in the upper half of the average range for this time of year,” the US-based agency said.

The US domestic production, however, rose to 9.31 million barrels per day from 9.29 million bpd the previous week.

The rise in crude prices was also supported by reports that the output cap deal between the OPEC members and other major exporters could be extended beyond the initial six-month period.

“Were OPEC and non-OPEC oil producers to extend their agreement beyond June, as seems likely, then by most estimates the market should tighten significantly and global stocks should decline more rapidly,” National Bank of Kuwait said in its latest update on oil markets.

The bank noted that the “bearish signals emanating from the US” have been exerting a downward pressure on prices.

Organization of Petroleum Exporting Countries (OPEC) and other major producers, including Russia, had last year agreed to reduce supply in an attempt to help rebalance global oil markets.

The six-month deal, which expires at the end of this month, could be extended further if all participants agree.

A formal decision on the extension will be made when OPEC and non-OPEC members meet in Vienna on May 25.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com