Oil prices on Wednesday climbed for the first time in more than a week on a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts could create a crude deficit in the first half of 2017.
Traders noted oil prices extended earlier gains as the dollar fell to its lowest level in two weeks against a basket of currencies after the Federal Reserve increased interest rates as expected but did not signal a faster pace of monetary tightening this year.
A decline in the dollar makes greenback-denominated oil less expensive for holders of other currencies. Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, the first weekly decline after nine straight increases.
OPEC agreed on Nov. 30 it would cut 1.2 million bpd during the first half of 2017, and on Dec. 10 that non-OPEC producers would cut about 600,000 bpd from their output.
Despite OPEC compliance with its share of the cuts, stockpiles have kept rising, partly because OPEC members pumped heavily before cuts kicked in and also because U.S. shale producers have raised output. Last week, futures prices plummeted more than 8 percent, their biggest declines since early November, as U.S. crude inventories surged to a record high.
OUTLOOK : We expect crude oil prices to trade positive on the back of surprise drawdown in U.S. crude inventories.