U.S. crude oil prices rose Thursday, snapping a three day losing streak as the market rebounded from a three week low amid signs that a supply glut is shrinking.
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U.S. crude future rose 31 cents, or 0.66%, to $47.09 a barrel. Brent, the global benchmark, rose 76 cents, or 1.51%, to $51.03 a barrel on ICE Futures Europe.
"It just looks like a bounce off the recent weakness," said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy trading desk.
U.S. government data released Wednesday showed that the amount of stored crude oil in the U.S. fell by nearly 9 million barrels last week. Oil stockpiles have fallen in nine of the last 10 weeks, and while stockpiles are still above the five year average, they stand below last year's level.
Still, prices tumbled after those figures from the U.S. Energy Information Administration were released, because the data also showed that U.S. oil production topped 9.5 million barrels a day.
The prospect of rising oil output in the U.S. "took the wind out of the sails" of the bullish data, said Gene McGillian, research manager at Tradition Energy.
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But signs of a tightening market helped lift prices Thursday, analysts and investors said. Contracts for Brent crude to be delivered in October have been trading higher than the subsequent months -- a market configuration known as backwardation, indicating a tightening in supplies available for immediate delivery.
OPEC and 10 other oil producing nations, including Russia, agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels in an effort to rein in a global supply glut and boost prices. Despite an extension of the deal in May, through March 2018, the market has remained subdued.
Also helping to lift prices Thursday was a fire in a unit of Royal Dutch Shell PLC's Deer Park refinery. The company said the fire has been extinguished. Still, the disruption could see "a little bit of tightness come back into the gasoline market," said John Kilduff, founding partner at Again Capital. That helped lift prices for fuel and oil followed, Mr. Kilduff said.
Gasoline futures rose 2.31 cents, or 1.48%, to $1.5869 a gallon. Diesel futures rose 0.76 cents, or 0.48%, to $1.5820 a gallon.
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(END) Dow Jones Newswires
August 17, 2017 16:42 ET (20:42 GMT)