An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT
An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China. Picture: REUTERS/STRINGER/CHINA OUT

London — Oil rose on Thursday after industry data showed a surprise drop in US crude inventories, while comments from Opec about lower-than-expected US shale production in 2020 also provided some support.

Prices were capped by mixed signs for oil demand in China, the world's biggest crude importer. Industrial output rose slower than expected in October, but oil refinery throughput hit the second-highest level on record.

Brent futures rose 72 US cents, or 1.15%, to $63.09 per barrel by 11.50am GMT, while West Texas Intermediate crude gained 57c, or 1%, to $57.69.

The secretary-general of Opec, Mohammad Barkindo, said on Wednesday that there were likely to be downward revisions of supply going into 2020, especially from US shale.

Opec and its allies, including Russia, meet on December 5 and 6 to discuss output policy and production curbs that have been in place since January with the aim of supporting crude prices. The supply pact runs to March 2020.

Barkindo said it was too early to say whether further output cuts would be needed.

“The countdown to the meeting of Opec has started, and the question of whether the group and its allies will further cut supplies is top of mind,” said Norbert Rucker, head of economics at Swiss bank Julius Baer.

“Current market conditions are testing the petro-nations’ patience and cohesion … Any major change in policy would come as a surprise”.

The American Petroleum Institute reported on Wednesday an unexpected drop in US crude stockpiles by 541,000 barrels in the week to November 8, against analysts' expectations of an increase of 1.6-million barrels. Petrol and distillate inventories increased, the API data showed.

Official weekly data from the Energy Information Administration is due at 4pm GMT on Thursday. Both reports were delayed a day for the US Veterans Day holiday on Monday.

Tamas Varga of oil broker PVM said the data helped jolt prices, which had been stagnant in recent days.

“The oil market has been suffering from fatigue in the past week or so. The major symptom is lack of direction that can be caused by shortage of developments. It is more of a lethargy than a sickness or illness, nevertheless — the patient usually reacts well to adrenaline shots.” 

Reuters