Oil rises to $53 approximately as inventory overhang erodes, Saudi cuts exports

Oil prices rose on Thursday lifted by a sustained decline in inventories and Saudi Arabia’s preparedness to cut crude supplies to its prized Asian customers.

Brent crude futures were 52.99 dollars a barrel by 0855 GMT, while US West Texas Intermediate crude was up 17 cents at 49.73 dollars.

Crude is down nearly seven per cent so far this year, suppressed in large part by concern that OPEC and its partners may not be able to force global oil inventories to drop by cutting production.

Saudi Arabia said on Tuesday it would cut supplies to most buyers in Asia – the world’s biggest oil-consuming region – by up to 10 per cent in September.

In a sign that investors are turning more optimistic about the pace at which oil supply and demand are rebalancing, prices for crude for prompt delivery are trading above those for delivery further in the future.

“This is the march toward the flattening of the curve,” said SEB chief commodity strategist Bjarne Schieldrop.

“The major event now going forward is the Middle East and Asian refineries rushing back into operation and consuming more crude just as Saudi Arabia says it will cut September deliveries to Asia,” he said.

Inventories in the United States are at their lowest since October having fallen for 10 of the last 12 weeks.

Global stocks remain above their longer-term-averages and with the summer driving season nearly at an end, investors are well aware that the attempts by the OPEC, Russia and other producers to boost prices may bring unwanted side-effects.