Oil prices rose on Thursday, boosted by an unexpected draw in U.S. gasoline inventories, although bloated crude supplies meant that fuel markets remain under pressure.
Brent crude futures, the international benchmark for oil prices, were trading at $55.41 per barrel at 0515 GMT, up 29 cents, or 0.5 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude was up 26 cents, or 0.5 percent, at $52.60 a barrel.
The U.S. Energy Information Administration (EIA) said on Wednesday that gasoline stocks fell by 869,000 barrels last week to 256.2 million barrels, versus analyst expectations for a 1.1 million-barrel gain.
Traders said that this surprise increase in U.S. gasoline inventories had helped push up crude, although most added that fuel markets were still bloated and that this would likely prevent further big price rises.
“We remain highly skeptical of the overnight price action,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA, referring to rising crude.
U.S. commercial crude inventories soared by 18.8 million barrels to 508.6 million barrels, according to the EIA.
U.S. bank Goldman Sachs said that high fuel inventories as well as rising U.S. crude production mean that oil markets will remain over-supplied for some time.
“The 4Q16 global oil market surplus led to further rises in global inventories in January, and as a result the draws that we expect will start from a high base,” the bank said.
“U.S. production has also rebounded faster than our rig modelling suggested, and we view the faster shale rebound as creating downside risk to our 2018 WTI price forecast of $55 per barrel, but not to our expectation that the global oil market will shift into deficit in 1H17,” it added.
Ongoing high inventories undermine efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to cut output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market.
As a result, both Brent and WTI are down around five percent since early January, when the OPEC-led cuts started to be implemented.
“Our 2017 Brent outlook is broadly neutral, with a $57.0 per barrel average forecast for the year,” BMI Research said.
“Agreed production cuts by OPEC and Russia are supporting prices, but heavy refinery maintenance, and production growth in Libya, Nigeria, and the U.S. Permian will cap gains,” it added.