Oil trading close to $50 per barrel on lower inventories

Brent oil is pushed closer to 50 $/bbl Wednesday, with US crude hitting its highest in over seven months after industry data suggested a larger-than-expected drawdown in US crude inventories last week.

Futures rose as much as 1.7 percent in New York Wednesday, marking a third day of gains. U.S. oil inventories, which are near the highest in 80 years, dropped by 5.14 million barrels last week, the American Petroleum Institute was said to report. That would be biggest decline since December. The Energy Information Administration is scheduled to release data later Wednesday.

Oil has surged more than 85 percent from a 12-year low earlier this year on signs the global glut will ease amid declining supply in Nigeria and non-OPEC countries including the U.S. While some of the world’s biggest producers continue to pump crude at near-record levels, the Organization of Petroleum Exporting Countries is unlikely to set an output target when it meets June 2 as it sticks with Saudi Arabia’s strategy of squeezing out rivals, according to all but one of 27 analysts surveyed by Bloomberg.

“We see some signs of recovery, but there’s still a lot of uncertainty out there,” Hans Jakob Hegge, chief financial officer of Statoil ASA, said in a Bloomberg TV interview. While demand is likely to grow, oil inventories remain at historically high levels, meaning producers face a tough year ahead, he said.

West Texas Intermediate for July delivery rose as much as 83 cents to $49.45 a barrel on the New York Mercantile Exchange and was at $49.26 at 9:35 a.m. London time. The contract gained 54 cents to $48.62 on Tuesday. Total volume traded was about 28 percent below the 100-day average.

For a story looking at why oil may never reach $100 a barrel again, click here.

Brent for July settlement increased as much as 78 cents, or 1.6 percent, to $49.39 a barrel on the London-based ICE Futures Europe exchange. The contract rose 26 cents to $48.61 on Tuesday. The global benchmark crude was on par with WTI.

In the meantime, China’s Yantai Xinchao Industry Co. is pursuing pursuing oil acquisitions worth as much as $1 billion in the Permian Basin, according to the head of the company’s U.S. subsidiary.

In Norway the government has called for greater competition in the country’s oil industry but Statoil ASA and Lundin Petroleum AB will remain rivals after the two companies deepened ties this month.