Oil leaps above $45 after U.S. crude stocks drop
U.S. crude oil futures extended their gains to above $45 on Wednesday after stocks of crude in the United States declined unexpectedly and demand for gasoline rose.
Prices were also supported by further supply disruption in Nigeria, as well as more positive economic news from China.
U.S. oil futures for April delivery rose to $45.02, up $3.37, by 11:12 a.m. EST.
London Brent crude rose $2.57 to $46.27 a barrel.
Overall the numbers are very bullish ... again, gasoline remains the one bright spot in the market that can really pull the complex higher, Chris Jarvis of Caprock Risk Management said.
Couple that with the composite of economic news out of China overnight and this is really setting the stage for the energy complex ... to move higher if the equities market can maintain themselves...
Weekly U.S. inventory data showed stocks of crude oil in the world's top consumer declined by 700,000 barrels versus expectations of a 1.2 million barrel build. Demand for gasoline over the past four weeks was up 2.2 percent from a year ago.
An oil leak and a fire on a pipeline in central Russia have halted flows to the Black Sea port of Novorossiisk and exports were unlikely to resume in the next three-to-four days, a port official said.
Russia, the world's second-largest oil exporter after Saudi Arabia, sends more than a quarter of its oil exports via the Black Sea ports of Novorossiisk, Odessa and Yuzhny.
Production has been disrupted in Nigeria by suspected sabotage. A senior official at the state-run NNPC said up to 70,000 barrels per day (bpd) had been shut in following pipeline explosions.
Oil supplies have already started to tighten, in part following action by the Organization of the Petroleum Exporting Countries to reduce supply.
U.S. crude inventory data from inventory body the American Petroleum Institute on Tuesday showed U.S. crude stocks had fallen by 463,000 barrels last week following lower imports and higher demand from refiners.
Oil prices have traded in a narrow band around $40 since mid-December, pulled down by falling demand but drawing some support from expectations OPEC might cut production again when it meets on March 15.
The 12-member producer group has announced plans to lower oil output by 4.2 million bpd from production levels in September and a Reuters survey found OPEC members had already met at least 81 percent of their promised cuts.
OPEC sources said on Wednesday that Angola, which is currently president of the group, did not advocate a further reduction at the next meeting on March 15 in Vienna, although other OPEC members have yet to make a decision.
Venezuela, Algeria and Libya have raised the possibility of a further reduction, while Iran has said OPEC needed to define a mechanism to support prices, without specifying what form it would take.
Data from China gave room for cautious economic optimism, with implications for higher oil demand, as the main gauge of China's manufacturing sector, its purchasing managers' index (PMI), rose in February.
China's PMI index rose for the third month in a row last month as factories restocked in anticipation of an early revival in the economy.
The data helped to revive sentiment on equity markets on Wednesday after the United States' S&P ended below 700 for the first time since October 1996. <.N>
(Additional reporting by Jennifer Tan in Singapore; editing by James Jukwey)
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