Oil jumps 53 cents to more than 2-week high, settling at $58.09, as US crude stocks fall

  • Crude inventories fell by 6.5 million barrels as refineries hiked output in the week to Dec. 15.
  • The continuing outage of the Forties pipeline in the North Sea is also putting a floor under prices.
  • Goldman Sachs forecasts global oil inventories will have rebalanced by mid-2018.
Oil fracking California
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Oil prices rose on Wednesday, supported by a drop in U.S. crude stockpiles and the continued outage of the North Sea Forties pipeline system.

U.S. West Texas Intermediate (WTI) crude futures ended Wednesday's session up 53 cents at $58.09 a barrel, posting the highest settlement in more than two weeks.

Brent crude futures, the international benchmark for oil prices, were up $1.23, or 2 percent, at $64.46 a barrel at 2:15 p.m. ET (1915 GMT).

Crude inventories fell by 6.5 million barrels as refineries hiked output in the week to Dec. 15, compared with analyst expectations for a decrease of 3.8 million barrels.

Gasoline stocks rose by 1.2 million barrels, compared with analysts' expectations in a Reuters poll for a 1.9 million-barrel gain. Distillate stockpiles, which include diesel and heating oil, were up by 769,000 barrels, versus expectations for a 870,000-barrel drop, the EIA data showed.

Oil prices have also been supported by the continuing outage of Britain's Forties pipeline in the North Sea, which delivers crude underpinning Brent futures.

Operator Ineos said repairs to the pipeline were underway on Wednesday after a crack was found that closed the pipeline. Ineos has a timescale of two to four weeks for the repairs starting from December 11.

Goldman Sachs said on Wednesday it forecasts global oil inventories will have rebalanced by mid-2018, "leading to a gradual exit from the cuts and increases in OPEC and Russia production through second half 2018."

The bank added that the ramp-up in OPEC production and rising non-OPEC output "will leave risks skewed to lower prices" in the second half of next year.

OPEC and ten other producers led by Russia extended an agreement to cut oil production but some 1.8 million bpd on November 30 until the end of next year.

The alliance is targeting the elimination of an oil glut to bring back inventories in the developed world back to the moving five-year average.

Traders said rising U.S. crude production, which has soared by 16 percent since mid-2016, was capping prices.

The EIA figures on Wednesday showed U.S. oil production at 9.79 million barrels a day, while exports reached 1.86 million barrels a day, near a recent all-time high

"Expectations of higher U.S. shale production into January hamstrung crude's price increase," said Jeffrey Halley, senior market analyst at futures brokerage Oanda in Singapore.

Most analysts expect U.S. output to break through 10 million bpd soon, which would be a new record and take it to levels on par with top exporter Saudi Arabia and close to top producer Russia, which pumps around 11 million bpd.

— CNBC's Tom DiChristopher contributed to this report.