Oil prices rise, heading to $53 on signs of tightening market

By Olaolu Oladipo, Lagos with agency reports

Oil prices rose on Tuesday, lifted by indications that supply is gradually tightening, especially in the United States.

Brent crude oil was up 40 cents at 52.06 dollars a barrel by 0715 GMT. United States light crude was 35 cents higher at 47.72 dollars.

“U.S. crude oil stocks have been falling consistently in recent weeks,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” Razaqzada said.

U.S. commercial crude inventories have fallen by almost 13 percent from their March peaks, to 466.5 million barrels.

U.S. crude production has broken through 9.5 million barrels per day (bpd), its highest since July 2015, but analysts say growth may slow as U.S. energy firms cut the number of rigs drilling for new oil.

The Organisation of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies and highten prices.

The weekly rollout of data on U.S. inventories starts later on Tuesday, giving the market a chance to see if the recent downward trend in U.S. crude stocks is continuing.

 

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