Crude Surges 1% after Surprise Drop in Inventories

Crude oil prices surged more than one-percent on Wednesday boosted by a bullish U.S. government reported and data from the International Energy Agency (IEA) suggesting OPEC production cuts should create a crude deficit in the first half of 2017.

International May Brent Crude was trading at $51.55, up $0.63 or +1.24% at 1700 GMT. U.S. May West Texas Intermediate Crude Oil was trading at $49.07, up $0.72 or +1.49%.

According to data from the U.S. Energy Information Administration (EIA), crude inventories fell by 237,000 barrels in the week to March 10, compared to a forecast for an increase of 3.7 million barrels. The surprise draw ended a streak of nine consecutive inventory builds.

The EIA also reported gasoline stocks fell by 3.1 million barrels, compared with expectations for a 2-million barrel drop. Distillate stockpiles were down 4.2 million barrels, versus expectations for a 1.7 million-barrel drop.

Fresh data from the IEA showed global inventories rose in January for the first time in six months despite aggressive efforts by OPEC and non-OPEC members to reduce output. However, the agency also said that if the cartel and its friends can maintain its production curbs, the oil market should see a deficit of 500,000 barrels per day in the first half.

“For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve,” the IEA said in its monthly report.

The statement from the IEA suggests that it may be a good idea for OPEC to extend its current deal to cut production, trim inventory and stabilize prices.