US oil rises above $50 a barrel for first time

London - Oil climbed above $50 a barrel in New York for the first time since June as declines in US crude inventories and OPEC’s pledge to reduce supply fanned hopes the global glut may clear.

Futures added as much as 0.7% after advancing 2.3% on Wednesday to the highest close in more than three months.

US crude stockpiles shrank below 500 million barrels last week for the first time since January, according to government data.

The market is set to remain oversupplied in 2017 and prices will stall at $55 a barrel as shale drillers get back to work, Goldman Sachs Group’s Head of Commodities Research Jeff Currie said.

Oil has gained about 11% since the Organisation of Petroleum Exporting Countries (OPEC) agreed last week to cut production for the first time in eight years.

Some analysts have expressed doubt that the individual quotas for output - to be determined at an official meeting of the group in Vienna on November 30 - will be sufficient to erode the market surplus as several countries boost production to restore disrupted supplies.

"We see more downside than upside to oil prices from current levels," said Norbert Ruecker, head of commodity research at Julius Baer Group in Zurich.

"We remain sceptical that OPEC’s deal will set bounds to the existing supply glut.

Middle Eastern exports are set to grow in the near term and the return of Nigeria and Libya are not-to-underestimate bearish wildcards."

US supplies

West Texas Intermediate for November delivery was at $50.11 a barrel on the New York Mercantile Exchange at 8:26. Total volume traded on Thursday was about 135 below the 100-day average. Prices rose 7.9% last month.

Brent for December settlement rose 32 cents, to $52.18 a barrel on the London-based ICE Futures Europe exchange. The contract gained 2% to $51.86 on Wednesday, the highest close since June 9.

The global benchmark crude traded at a $1.54 premium to WTI for December.

US crude stockpiles dropped by 2.98 million barrels for a fifth weekly decline, the Energy Information Administration reported on Wednesday. A Bloomberg survey had forecast a supply gain.

Crude production declined for a second week to 8.5 million barrels a day.