Brent crude and West Texas Intermediate (WTI) oil prices climb after EIA data shows a drop in US inventories

Courtney Goldsmith
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Opec will decide whether to extend its supply cut when it meets at the end of the month (Source: Getty)

Oil prices climbed this afternoon after official data showed US crude inventories fell by 5.2m barrels from the previous week.

Data from the Energy Information Administration (EIA) showed US stockpiles dropped for the fifth straight week to a total of 522.5m barrels. However, the EIA said crude inventories are in the upper half of the average range for this time of year.

This follows data from the American Petroleum Institute (API), which reported inventories fell by 5.8m barrels last week - more than the 1.8m barrel decline analysts predicted.

Benchmark Brent crude prices were trading 2.2 per cent higher at $49.80 a barrel while West Texas Intermediate (WTI) prices were up 2.35 per cent at $46.96 a barrel in afternoon trading.

The Organisation of the Petroleum Exporting Countries' (Opec) agreed supply cut has been called into question as rising US production undercuts efforts to prop up the price of oil. The cartel will meet on 25 May to decide whether or not to extend its six-month deal to curb output beyond June.

"Many analysts are focusing on the efficiency gains that US shale producers have made. The fear is that any rise in prices will not be sustained as shale producers can respond by profitably increased supply. In addition demand growth including the key US 'driving' season is expected to be weaker than expected," said Mihir Kapadia, chief executive and founder of Sun Global Investments.

Read more: Saudi Arabia has surrendered control of the global oil market to US shale

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