Oil prices climb on falling stockpiles

Oil reverses course and rises as dollar backs off highs

Oil prices climb on falling stockpiles

Those gains in oil prices had come after U.S. crude stocks unexpectedly declined by 1.6 million barrels in the week ending February 16, Reuters said, citing data from the U.S. Energy Information Administration.

USA crude oil production was virtually unchanged at 10.27 million barrels per day (bpd), close to levels of top producer Russian Federation and more than OPEC-kingpin Saudi Arabia pumps.

Brent crude futures LCOc1 were last up 13 cents at $65.55 a barrel by 1500 GMT, as were West Texas Intermediate (WTI) futures CLc1 which were last at $61.81 a barrel. That compared to the 1.8 million-barrel rise in inventories forecast by experts.

"The unexpected fall in oil inventories in the US should see support for crude oil prices remain strong", said ANZ Research analysts in a Friday morning note.

Brent crude futures were down 6 cents at $66.33 a barrel.

The premium of Brent over WTI widened to nearly $3.60/Bbl, having neared its narrowest point in six months on Tuesday, as concern about a bottleneck of Canadian crude imports underpinned USA futures.

Distillate stockpiles, which include diesel and heating oil, fell by 2.4 million barrels, versus expectations for a 1.5 million-barrel drop, the EIA data showed.

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'Part of that (inventory fall) is the shape of the oil curve which makes it uneconomic to store product, ' said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

In a market structure called backwardation, prompt crude prices are higher than forward prices, discouraging storage.

"Crude oil inventories will not increase as they have done historically, because of our ability to export crude oil from an ever increasing variety of locations on the Gulf Coast", said Andy Lipow, president of Lipow Oil Associates. That helped pull down net imports to the lowest level on record of below 5 million bpd.

Energy stocks in Japan saw sharper gains, with oil producer Inpex trading higher by 2.55 percent and Cosmo Energy gaining 4.59 percent.

Last week, the Louisiana Offshore Oil Port, a major import terminal, announced a test to load crude onto a supertanker in an attempt to send more oil to overseas markets.

A stronger dollar puts pressure on dollar-denominated commodities like oil.

A softer greenback made the dollar-priced oil more attractive for holders of other currencies.

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