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Oil prices leap after U.S. weekly crude supply shrinks over three times more than expected

The data largely confirmed a bullish report on Tuesday by the American Petroleum Institute (API) and suggested that the U.S. oil market was rebalancing after many months of large surpluses.

LONDON – Oil prices rose on Wednesday after U.S. government data confirmed a big weekly drawdown in crude inventories as well as on signs that U.S. oil production growth was leveling off after many years of sharp increases.

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The U.S. government\’s Energy Information Administration (EIA) said on Wednesday that U.S. crude oil stocks fell 6.81 million barrels to 470.6 million last week, a lot more than a forecast drawdown of 1.72 million barrels.

The data largely confirmed a bullish report on Tuesday through the American Petroleum Institute (API) and suggested that the U.S. oil market was rebalancing after many months of large surpluses.

\”The report is squarely bullish because of the large crude oil inventory drawdown, which confirmed the API data from last night,\” said John Kilduff, partner at New York energy hedge fund Again Capital.

Brent crude prices rose US$1.48 to some two-week high of US$66.36 a barrel and were trading at about US$65.80, up 92 cents, by 10:45 a.m. U.S. light crude was up 90 cents at US$61.04.

The U.S. stocks figures were in line with other reports that pointed to some gradual tightening of U.S. oil markets.

In its monthly report published on Wednesday, OPEC added to bullish news, saying it expected rival producers\’ output to rise less strongly and global oil demand to tick up.

Tuesday\’s API report followed a prediction by the U.S. government that domestic oil production would fall more strongly and for longer than expected.

\”It could be madness to talk bearish,\” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

? Thomson Reuters 2015