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Oil prices steady as US crude inventories indicate tighter market

Oil prices steadied on Thursday, holding on to most of their recent gains after another fall in U.S. Photograph: (Reuters)

Reuters London, United Kingdom Aug 24, 2017, 11.53 AM (IST)

Oil prices steadied on Thursday, holding on to most of their recent gains after another fall in US crude inventories indicated a tighter market, and as a tropical storm headed towards oil producing facilities in the Gulf of Mexico.

Benchmark Brent crude was down 5 cents a barrel at $52.52 by 0925 GMT. US light, sweet crude was 10 cents lower at $48.31 a barrel.

Both contracts rose more than 1 percent on Wednesday, buoyed by potential output disruptions from the Gulf of Mexico storm Tropical Depression Harvey.

"For the next few days, the US market is going to be focused on Texas as Tropical Depression Harvey is expected to strengthen into a Category I hurricane by Friday," said Sukrit Vijayakar, director of energy consultancy Trifecta.

"Operators in the area are already closing down platforms and evacuating workers as a precaution," he added.

Harvey strengthened into a tropical storm late on Wednesday night with winds of about 40 miles per hour (65 km per hour) and was located about 440 miles (705 km) southeast of Port Mansfield, Texas, the U.S. National Hurricane Center reported.

Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all taken steps to curb some oiland gas output at platforms in the Gulf.

Beyond the weather, traders said declines in US commercial crude storage levels were a sign of a gradually tightening market, although another rise in output held the market back.

US crude oil production hit 9.53 million barrels per day (bpd) last week, its highest since July 2015 and up over 13 percent from their most recent low in mid-2016.

Despite this, U.S. crude stocks fell last week and gasoline stocks were down as well, the Energy Information Administration said on Wednesday.

Crude inventories fell by 3.3 million barrels in the week ending Aug. 18 to 463.17 million barrels, down 13.5 percent from record levels last March.

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