Crude oil futures on both sides of the Atlantic settled higher on Wednesday, shrugging off early losses after a report showed an unexpected drawdown in crude oil inventories in the United States, the world's largest oil consumer. Mounting tensions in the Middle East and stronger-than-expected growth expectations for China also helped lift the international benchmark Brent price off a two-year low.
Weak European economic data and a rise in oil exports from Iraq, Libya and Nigeria have eroded Brent over the past few months, pulling it down by around 14 percent this quarter, the biggest quarterly drop since the second quarter of 2012. US crude reversed earlier losses to gain more than $1 on Wednesday following an Energy Information Administration report that said US stocks fell 4.3 million barrels last week to 358 million barrels, compared with analysts' expectations for an increase of 386,000 barrels, although crude stocks at the Cushing, Oklahoma, delivery hub rose by 191,000 barrels.
-- Libyan output up at 900,000 bpd
RBOB gasoline futures also got a lift from news of glitches at several US refineries, including Valero's Meraux and Alon's Big Spring. "RBOB was strong on a slew of refinery news; that may have inspired a little bit of buying," said Phil Flynn, an analyst at the Price Futures Group in Chicago. Brent crude for November delivery rose by 10 cents to settle at $96.95 a barrel, more than $1 higher than its session low of $95.60, its lowest since July 2012. It was down more than 6 percent for the month so far, the biggest monthly drop since April 2013.
US crude rose by $1.24 to settle at $92.80 a barrel as the unexpected drawdown in weekly US stocks offset earlier losses that had dragged it down to $91.12. As US crude's gains outpaced Brent's, the spread between the two benchmarks narrowed to less than $4 during the session, the second-narrowest point since April.
US crude has traded largely between around $90 and $96 for the past month. "We've been stuck between $90.50 and $96 for a while now. The market can move by $1 without showing us any conviction. Interday momentum traders are dominating the action," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Libya's national oil production is currently at 900,000 barrels per day (bpd), with the major El Sharara oilfield at 200,000 bpd, an official at the National Oil Corporation said on Wednesday. Exports from Iraq's southern terminals have averaged 2.58 million bpd, according to shipping data for the first 23 days of September tracked by Reuters, up from the August average of 2.38 million.
Nigeria's oil exports are expected to hit a 14-month high in November, adding more light, sweet crude oil to an already well supplied market. The European Central Bank faces an uphill task to spur economic growth as euro zone business activity expanded at a slightly weaker pace than expected in September and firms cut prices for the 30th month in a row, a survey showed.
Manufacturing and services output in the bloc's top two economies, Germany and France, has also slowed. In China, August crude inventories, excluding strategic reserves, were higher than the previous month. However, the International Monetary Fund said it expected China's 2015 economic growth to be "well above" 7 percent.
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