US crude settles up 26 cents at $50.44 as product draws offset crude build

Crude oil inventories up 4.9M barrels

Oil prices steadied on Thursday, as a U.S. government report of larger-than-expected draws in diesel and gasoline helped prices rebound from losses after data showed the first crude inventory build in six weeks.

Crude prices fell when the Energy Information Administration (EIA) said U.S. crude stocks swelled 4.9 million barrels in the week ended Oct. 7, much more than the 700,000 barrels forecast by analysts polled by Reuters.

Prices bounced back as the market turned its attention to product inventory drawdowns in the same EIA data. The EIA reported a drop of 3.7 million barrels for distillates, which include diesel and heating oil, and 1.9 million barrels decline for gasoline.

Analysts had expected distillates to draw by just 1.6 million barrels and gasoline to decline by 1.5 million.

Brent crude futures were trading up 19 cents at $52 per barrel at 2:35 p.m. ET (1835 GMT). U.S. West Texas Intermediate (WTI) crude settled up 26 cents to $50.44 per barrel.

U.S. gasoline futures were up about 1.3 percent at $1.4804.

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"There is a lot of seasonality in this data," Scott Shelton, energy futures broker at ICAP in Durham, North Carolina, said, adding that crude builds were common this time of year as U.S. refineries headed into maintenance.

Shelton said the rise of crude imports by 110,000 barrels per day (bpd) last week was "marginal" and "hard to get too excited about if you were bearish."

John Kilduff, partner at New York energy hedge fund Again Capital, said that while more crude builds were likely in the coming weeks due to depressed refinery runs, "the declines in distillate fuels, of late, are starting to add up."

"We remain a long way from supplies getting tight, but it is a trend worth monitoring," Kilduff added.

Oil prices have trended higher, with Brent gaining more than 13 percent, since the Organization of the Petroleum Exporting Countries announced on Sept. 27 its first planned output cut in eight years to rein in a global supply glut that forced crude to crash from highs above $100.

But OPEC's production figures jar with its expressed desire to cut output, with the group's September production reaching eight-year highs.

Major oil industry executives and investors at a Reuters Summit in London differed in their views on the price direction for oil in coming months based on OPEC's likely action.

"In 2014, the big opportunity was in prices going down and now the big opportunity is in prices going up. That's the way I see it," said Pierre Andurand, manager of the $1.4 billion Andurand Capital fund in London, which has forecast $60 prices by the year-end.

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But some investors see the OPEC plan to curb output as a reason to take a bullish stance on the prospects for crude prices.

"In 2014 the big opportunity was in prices going down and now the big opportunity is in prices going up. That's the way I see it," hedge fund manager Pierre Andurand told the Reuters Commodities Summit.

He added that OPEC's decision in Algiers to limit its overall output to 32.5-33 million bpd "takes off a large wild card from the oil markets for 2017."

The market received some support from China, which imported record volumes of crude oil last month, eclipsing the United States as the world's top buyer of foreign oil for the third time in a year, in a trend that could soon put the Asian nation at the top of the world's oil import table permanently.

China's September crude imports rose 18 percent from a year earlier to 33.06 million tons, or 8.04 million bpd on daily basis, customs data showed, compared with the U.S. four-week average of 7.98 million bpd.

Oil imports hit a record despite a worse-than-expected 10 percent fall in Chinese exports and a 1.9 percent drop in imports that cast a gloomy outlook on its economy.