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Oil prices rose to a two-week high on Thursday, extending a rally into a sixth straight session, after a decline in weekly US production eased concerns about deepening oversupply.
Crude prices slipped to the lowest in 10 months last week but have since rebounded more than 7 per cent, stretching their bull-run to the longest since April.
Global benchmark Brent crude futures were up 33 cents at $47.64 a barrel at 0832 GMT, having touched a two-week high of $47.83 earlier in the session.
US West Texas Intermediate (WTI) crude was up 32 cents at $45.06 a barrel. It registered an intraday high of $45.24, also the loftiest in two weeks.
“After the steep drop in oil prices of recent weeks, I believe that especially hedge funds saw a nice buying momentum and lower US crude production was the trigger to act,” said Hans van Cleef, senior energy economist at ABN Amro.
Steepest weekly fall
US government data showed on Wednesday that domestic crude production dropped by 100,000 barrels per day (bpd) to 9.3 million bpd last week, the steepest weekly fall since July 2016.
Some analysts and traders said the decline was related to temporary factors such as risks associated with Tropical Storm Cindy in the Gulf of Mexico and maintenance in Alaska.
Investors shrugged off bearish news of a surprise 118,000-barrel rise in weekly US crude stocks.
Global oil supplies remain ample despite output cuts by the Organization of the Petroleum Exporting Countries and other producers of 1.8 million bpd since January.
OPEC and its allies, trying to reduce a crude glut, agreed in May to extend the supply cut through March 2018. OPEC has exempted Nigeria and Libya from the curbs due to unrest that has sapped those countries' production.
Royal Dutch Shell had on Wednesday lifted force majeure on Nigerian Bonny Light crude exports after pipeline repairs.
Analysts at investment bank Goldman Sachs said rising Nigerian and Libyan output, as well as a ramp-up in US shale oil drilling, would slow the drawdown in crude inventories.
“This creates risks that the normalisation in inventories will not be achieved by the time the OPEC cut ends next March. We expect this will leave prices trading near $45 (a barrel) until there is evidence of a decline in the U.S. horizontal oil rig count, sustained stock draws or additional OPEC production cuts,” they wrote.
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