By Sarah McFarlane and Jenny W. Hsu
Crude futures edged higher on Friday, after data from the U.S. Energy Information Administration showed smaller-than-expected growth in U.S. crude stockpiles.
Brent crude, the global oil benchmark, rose 0.4% to $57.06 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were up 0.4% at $53.99 a barrel.
Oil trading remained tepid ahead of the New Year holiday. Global oil markets will be closed Monday.
EIA data showed that U.S. crude inventories grew by 614,000 barrels in the week ended Dec. 23, a moderate rise compared with the 4.2 million barrels increase tipped by the industry group American Petroleum Institute, but still above the 1.2 million barrel contraction forecast by analysts surveyed by The Wall Street Journal.
At 486.1 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of the year, the EIA said.
"The main driver behind last week's build was a slowdown in refinery activity," said S&P Global Platts, noting that the refinery utilization rate fell 0.5% to 91% of total capacity. This is the time of the year when crude stocks usually fall, as refiners increase production.
Gasoline stock decreased by 1.6 million barrels, while distillates fuel inventories dropped by 1.9 million barrels in the same week. Production also fell by 20,000 barrels from a week earlier to 8.76 million barrels, roughly 4.4% lower than in same period last year.
Analysts say the current downtrend in U.S. oil production could reverse as oil prices rise, frustrating the Organization of the Petroleum Exporting Countries' latest effort to lift prices by cutting the group's overall output.
In November, after more than two years of low prices, the cartel and 11 non-OPEC players agreed to slash production by almost 1.8 million barrels a day. Oil prices subsequently rallied to more than one-year highs, breaking above $50 a barrel.
"The market has more faith that the participating nations will comply with the assigned production quotas this time because everyone is eager to get the prices up," said Gao Jian, energy analyst at SCI International.
Since the inking of the deal, several OPEC members have voiced their commitment to the cut. However, most market watchers are waiting to see the production reports for the first few months of 2017 to gauge whether producers have really made good on their pledges. In the past, producers have been known to cheat and produce above their allotted limits.
"Failure on OPEC and Russia's part to deliver the promised cuts could trigger a 10% to 15% correction," said Ole Hansen, head of commodity strategy at Saxo Bank, referring to oil prices.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.4% to $1.67 a gallon. ICE gasoil changed hands at $502.75 a metric ton, unchanged from the previous settlement.
Write to Sarah McFarlane at firstname.lastname@example.org and Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
December 30, 2016 05:33 ET (10:33 GMT)
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