Oil markets firm on rising refinery demand, falling U.S. rig count

Crude prices rise on signs of drop in global inventories

US crude posts 5.1% weekly gain to settle at $49.89

U.S. crude oil stockpiles jumped last week as imports and production increased, the U.S. Energy Information Administration said, as operations resumed from the impact of Hurricane Harvey which hit the Gulf Coast on August 25.

"If I look at this week's EIA data, post hurricane. the refined products drawdown implies that refineries are not yet back to normal", he said.

Oil has risen more than 5 per cent in NY since Harvey slammed into the Texas coast on August 25, swamping the heart of the U.S. refining industry and disrupting everything from tanker arrivals to gasoline production.

Brent for November settlement advanced $1.03 to $56.17 a barrel on the London-based ICE Futures Europe exchange.

Gasoline stocks fell 2.1 million barrels, the EIA said Wednesday, in line with analysts' expectations, while distillate stocks inventories fell 5.7 million barrels, the biggest weekly draw since November 2011. Inventories expanded by 1.44 million barrels last week, the American Petroleum Institute was said to report. Earlier this week, Iraqi Oil Minister Jabbar al-Luaibi said he and ministers from other oil-producing nations think production should be reduced by an additional one per cent.

The West Texas Intermediate for October delivery increased 0.93 USA dollar to settle at 50.41 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery added 1.15 dollars to close at 56.29 dollars a barrel on the London ICE Futures Exchange.

Early Wednesday, traders are showing nearly no reaction to comments from Iraq's oil minister who said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut. Total volume traded was about 2% below the 100-day average. Crude production increased for a second straight week, yet distillate supplies slid by 5.69 million barrels and gasoline stockpiles fell to 216.2 million barrels.

"Any increase in the production from the spring of 2018 would...generate renewed oversupply in the oil market and put prices under pressure", the analysts wrote in a note Wednesday. The more-active November futures contract climbed 79 cents to $US50.69.

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