Crude oil prices bounced back from their intra-day lows yesterday after figures from the International Energy Agency showed that US stockpiles had grown by less than the market had expected last week.
Crude inventory stocks increased by 400,000 barrels, according to the agency, but this was more than one million barrels less than the consensus forecast. Gasoline stocks grew by 2.1 million barrels, which was more than expected.
"Inventory levels are building, but not fast enough," said Mr Kevin Norrish, at Barclays Capital. "Despite the increase, gasoline stocks are still very low. Crude products have seen tight supply for some time and we expect that to continue."
The report sent crude oil prices up more than 60 cents from the lowest point in London and New York.
Prices fell at the start of the session in London after a report on Tuesday showed Organisation of Petroleum Exporting Countries (OPEC) producers were pumping oil last month in excess of their new quota targets.
OPEC officials at the meeting in Beirut last week said the cartel had produced 26 million barrels a day last month, while a Reuters survey indicated that the group had lifted output to 26.28 million barrels a day in May.
OPEC's official output quota will rise to 25.5 million barrels per day from 23.5 million from July 1st.
"The figures suggest that Saudi Arabia and the United Arab Emirates, the two OPEC nations that promised to raise production by a combined one million barrels per day in June, had already begun increasing production last month," said Mr Norrish.
Prices were underpinned by continuing fears of risk to supply. Output from Nigeria, an OPEC member and the world's seventh-largest producer, is under threat from a planned general strike by the country's largest union over rising fuel prices.
Although the government agreed to intervene to bring pump prices down, the strike began yesterday with oil workers participating, and causing delays to the discharge of 11 vessels backed up outside the port of Lagos.
In Iraq, supplies have been hit by sabotage along its export pipeline to the north, which has been idle since the end of May. This means exports are limited to the 1.65 million barrels per day.
Nymex light crude for July had risen five cents to $37.30 (€30.80) per barrel by midday in New York and in London Brent crude was six cents higher at $35.11.
- (Financial Times Service)
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)