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Crude benchmarks on both sides of the Atlantic perked-up on Wednesday after an industry report pointed to sharp declines in US oil and gasoline stocks.
Brent crude, the international marker, was up 1.2 per cent to $51.08 a barrel, after settling on Tuesday at its lowest level since November 29. West Texas Intermediate, the US standard, rose 1.1 per cent to $48.17 a barrel, bouncing back from its weakest settle in more than a month.
The more bullish sentiment came after the American Petroleum Institute reported that crude stocks slid 4.2m barrels last week, with gasoline inventories off by 1.9m, according to Olivier Jakob at Petromatrix, an energy consultancy. The figures come ahead of the more closely watched report that is due later on Wednesday from the US energy department.
A drop in gasoline inventories may garner particular attention, since the energy department data have printed two-straight builds, something that has sparked concerns about demand for the key petroleum product ahead of the important summer driving season in the US.
Still, Mr Jakob notes that a “main risk” is that the US government figures will ” show less of a stock draw than the API”.
The recent bout of weakness in oil prices, prompted by a rise in concerns over North American supply and global demand, have also ricocheted into other markets.
Further falls in the price of Brent, particularly below $50, could leave the currencies of oil exporters, like Norway, Canada, Russia and Colombia “vulnerable”, said Kit Juckes, strategist at Societe Generale.
In equities, the US energy sector has dropped 10.7 per cent so far this year, against a 6.8 per cent rally for the S&P 500. That comes after the industry posted a 23.7 per cent surge last year as investors cheered gains in the oil price.