Oil prices rose to the highest level in more than two years Wednesday, boosted by a drop in U.S. crude stockpiles.
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Light, sweet crude for January delivery gained $1.19, or 2.1%, to $58.02 a barrel on the New York Mercantile Exchange, the highest close since June 2015. Brent, the global benchmark, advanced 75 cents, or 1.2%, to $63.32 a barrel.
On Wednesday, the U.S. Energy Information Administration reported that crude inventories fell by 1.9 million barrels in the week ended Nov. 17, exceeding analyst expectations for a drop of 1.5 million barrels. The data helped ease concerns over high stockpiles in the U.S. even as global supply has declined.
Prices also rose on disruptions to TransCanada Corp.'s Keystone pipeline, which leaked about 5,000 barrels of oil last week. Analysts said this contributed to the decline of crude stockpiles at Cushing, Okla., an important hub for oil storage and pricing.
The U.S. data temporarily drew attention away from a coming meeting between the Organization of the Petroleum Exporting Countries and other global producers, set for Nov. 30. Oil prices have risen in recent weeks on expectations the group will extend a deal to curb production past March 2018.
"We continue to see support from the optimism that you'll see an extension agreed to next week," said Gene McGillian, research manager at Tradition Energy. Along with healthy demand, "those two factors still seem to be outweighing that U.S. and North American production is going to be increasing," he said.
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U.S. production reached another record weekly high last week to 9.658 million barrels per day, according to the EIA.
"We're going to need to see this kind of [reduced inventories] data every week to start another leg on this rally," Mr. McGillian said.
Oil prices pared gains briefly following the EIA report, as the crude draw fell short of estimates from the American Petroleum Institute for a decline of 6.4 million barrels. However, prices rebounded to close at fresh-two year highs, amid thin trading and improved market sentiment.
With bullish speculative bets on oil hovering near record highs, analysts warn the market could be underwhelmed by an announcement from OPEC and vulnerable to a selloff next week. While most market participants are betting on an extension, more uncertainty surrounds the length of any such deal.
"The issue is, is it three or is it six or is it nine [months]?" said Donald Morton, senior vice president of Herbert J. Sims & Co., who oversees an energy trading desk.
The EIA reported that gasoline stockpiles were unchanged last week, and distillate stockpiles rose by 300,000 barrels.
Gasoline futures fell 0.3% to $1.7679 a gallon and diesel futures lost 0.2% to $1.9326 a gallon.
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(END) Dow Jones Newswires
November 22, 2017 16:32 ET (21:32 GMT)