By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices rose more than 1 percent Wednesday, lifted by a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.
Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, dropping after nine consecutive increases.
Inventories fell by 237,000 barrels in the week to March 10, compared with analysts' expectations for an increase of 3.7 million barrels. [EIA/S]
Adding to the bullish sentiment, the IEA said global inventories rose in January for the first time in six months despite OPEC output cuts, but said if it stuck to its production curbs the market should see a deficit of 500,000 barrels per day (bpd) in the first half. [IEA/M]
"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.
Brent futures rose more than $1 from Tuesday's close to a session high of $52.08 a barrel. By 10:51 EST (1451 GMT), prices were up 63 cents, or 1.24 percent, at $51.55 a barrel. Prices had hit a more than three-month low of $50.25 during the previous day's trading.
U.S. West Texas Intermediate crude was up 63 cents, or 1.32 percent, at $48.35. On Tuesday, the price fell to $47.09, also the lowest since late November.
The Organization of the Petroleum Exporting Countries said at the end of November it would cut 1.2 million bpd during the first half of 2017, and in December that non-OPEC producers would cut about 600,000 bpd from their output.
Despite OPEC compliance with its share of the cuts, stockpiles have continued to rise, in part because OPEC members pumped heavily before cuts kicked in and also because U.S. shale producers have raised output as Brent spiked above $58 in January.
Last week, prices plummeted more than 5 percent, the biggest drop in a year, as U.S. crude inventories surged much more than expected to a record high. [nL3N1GL1E5]
"While such patience (counseled by the IEA) may indeed benefit longer-term investors it may not be much help for money managers facing year-to-date losses on long positions, whether longer-term holdings benchmarked to the December 30 Brent closing price of $56.82 or purchased over the long period of range trading over the first ten weeks of the year." Tim Evans, Citi Futures' energy futures specialist, said in a note.
"Surplus inventories and rising U.S. production may be more of a worry to them."
(Additional reporting by Edmund Blair in London, Aaron Sheldrick and Osamu Tsukimori; editing by Louise Heavens and Chizu Nomiyama)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)