Oil prices jump on US data

Oil-Price-Singapore Brent North Sea crude for July surged USD 1.50 to USD 47.02 a barrel compared with Tuesday's close

Oil prices rallied further on Thursday after data revealed an unexpected drop in US crude inventories, with analyst blaming the fall on Canada's wildfires causing disruption to exports across the border.

At around 1600 GMT, US benchmark West Texas Intermediate for delivery in June was up USD 1.24 at USD 45.90 a barrel.

Brent North Sea crude for July surged USD 1.50 to USD 47.02 a barrel compared with Tuesday's close.

The US Department of Energy (DoE) on Thursday said the country's commercial crude stockpiles slid by 3.4 million barrels last week. Analysts' consensus had been for a rise of 750,000 barrels.

"The drawdown may well have been due to the wildfires in Canada (whose)... main export market is the US," said Fawad Razaqzada, analyst at traders City Index.

"Indeed, US crude oil imports were down by a good 5,000 barrels per day from the previous week, according to the DoE.

"Imports are likely to fall further this week because of the significant reduction of oil output in Canada. News that US oil production also fell, down 0.3 per cent week-over-week, provided further support to prices," he added.

Brent crude prices had already soared by almost two dollars on Wednesday, as traders focused on lingering oil producer shutdowns in Canada and plummeting output in Nigeria. In a volatile trading week, crude tumbled Monday on news that Canadian wildfires failed to inflict long-term damage on key oilfield infrastructure.

But market sentiment became more bullish again on Wednesday, as investors concluded that the production outages in the Alberta oil sands region could persist a while longer, even if facilities were not seriously damaged and the worst of the fires was over.

"The sentiment around traders in the market is that they do think the disruptions are a temporary obstacle," CMC Markets senior trader Alex Wijaya told AFP.

Market attention was also on Nigeria owing to fresh unrest in Africa's biggest oil producer.

Anglo-Dutch oil giant Shell's Nigerian subsidiary on Thursday said it has declared force majeure on Bonny Light crude exports following a leak in a key pipeline.

Yesterday's incident comes after an increase in attacks on oil facilities and infrastructure by militants wanting a fairer share of revenue for local people in the impoverished region.

Force majeure is a legal term that frees a company from any contractual obligation owing to circumstances beyond its control.

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Topics : #fuel | #business

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