Oil ends higher following weekly fall in U.S. crude supplies

Use of the straits may increase as production in Kazakhstan increases.

"As we exit summer driving season, peak demand season, it's good to continue to see draws", said Nick Holmes, an analyst at Tortoise Capital Advisors LLC in Leawood, Kansas, which manages $16 billion in energy-related assets.

John Kilduff from Again Capital said that the danger of PDVSA defaulting on its debt is negligible: it still has US$10 billion in reserves and its debts are mostly to Russian Federation and China, who may be willing to continue supporting it.

With the Organisation of Petroleum Exporting Countries, OPEC, compliance faltering under the existing deal, and Russian Federation showing little interest in cutting more production, it's dubious as to what will be done going forward, even if the terms of the deal are changed on paper and announced in the media. The increasing numbers of operating rigs, as well as increasing production, have been raising concerns that the US shale oil producers which were able to cut their production cost dramatically over the past years are now a low-priced global competitor and would continue to undermine the OPEC agreement to cut supplies.

Jeffrey Halley, senior market analyst at futures brokerage OANDA, said rising US gasoline inventories were "not a good sign during the USA summer driving season".

The September contract for West Texas Intermediate crude oil United States which expired at Tuesday's settlement, rose 27 cents, or 0.6%, to settle at $47.64 a barrel on the New York Mercantile Exchange, after slumping 2.4% on Monday. Total volume traded was about 26 percent below the 100-day average.

New York's NYMEХ (New York Merchantile Exchange) is a U.S. futures market founded in 1882. The global benchmark crude traded at a premium of $4.21 to October WTI.

The Bloomberg Dollar Spot Index fell as much as 0.3%.

World oil prices declined on August 23 on the backdrop of the data from the American Petroleum Institute (API) that gasoline and distillate stocks in the US have increased by more than 1 million barrels per week.

Yesterday´s API estimate of a 1.4 million-barrel rise in gasoline stocks over the week compares with market expectations for a 643,000-barrel drawdown.

"These crude draws are primarily supported by continued high refinery margins - USA refinery utilization was above 95% last week", said Jeff Quigley, director of energy markets at consulting and analytics firm Stratas Advisors.

"The report was pretty bullish for crude", Tamar Essner, an energy analyst at Nasdaq Inc.in NY, said by telephone. U.S. light, sweet crude was also 30 cents higher at $47.67. "It's not going lower".

  • Eleanor Harrison