Oil jumps as US crude inventories fall

AP FILE PHOTO

NEW YORK, United States — Oil scored a second straight day of solid gains Wednesday as US crude inventories fell much more than expected and Brexit fears receded.

Oil prices advanced on easing worries about Britain’s vote to leave the European Union and its impact on the global economy.

The gains accelerated after the US Department of Energy reported the country’s commercial crude inventories fell by 4.1 million barrels to 526.6 million barrels in the week ending June 24.

The drop was about twice as large as expected.

US benchmark West Texas Intermediate for August delivery jumped $2.03 to $49.88 a barrel on the New York Mercantile Exchange.

In London, Brent crude for delivery in August, the global benchmark, finished at $50.61 a barrel, also a gain of $2.03 from Tuesday’s settlement.

It was the sixth straight week of falling crude stockpiles in the United States, the world’s largest consumer of crude, a jolt of good news amid worries about abundant global supplies.

“That’s bullish on its own,” said Bob Yawger of Mizuho Securities USA.

But he also pointed to a sharp drop in US crude production of 55,000 barrels per day.

“That was the biggest slide in domestic production since February, so a very important number,” he said.

The oil market mirrored the rebound on US and European stock markets for a second day from a brutal selloff after Britain unexpectedly voted to exit the EU on Thursday.

Analysts also highlighted a market lift from the threat of a strike in Norway affecting supplies, as well as the shutdown of two offshore platforms in the US Gulf of Mexico.

“The possibility of a strike in the Norwegian upstream sector, where a pay dispute involving more than 700 workers at seven producing fields, has the potential to impact combined oil output of around 280,000 barrels per day — almost a fifth of the country’s output,” said analysts at JBC Energy.