Crude oil prices rise on a significant reduction to US stockpiles

 
Courtney Goldsmith
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Opec could extend its production cuts for another six months to bolster prices (Source: Getty)

Oil prices reversed a downward trend this afternoon after data revealed a larger than expected drawdown in US crude inventories.

Brent crude prices jumped to $52.33 a barrel, while US benchmark West Texas Intermediate (WTI) futures traded at $50.10 after the figures were released.

The US Energy Information Administration (EIA) said crude stocks dropped by 3.6m barrels last week - more than double what analysts expected, according to Reuters.

This goes against data from the American Petroleum Institute (API), which was released late last night to show crude oil stocks rising 897,000 barrels in the week to 21 April.

The Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers including Russia have agreed to cut output by 1.8m barrels per day (bpd) over six months. Crude prices have benefited somewhat from talks of a six-month extension to to the cuts, but ramped up US production and Russia's hesitation has curbed gains.

"The market remains heavy with doubts about Opec's ability to achieve a successful extension of the current deal with Russia adopting a lukewarm 'wait and see' approach," said Ole Hansen, head of commodity strategy at Saxo Bank.

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