NEW YORK: Crude prices firmed on Wednesday, supported by a larger-than-expected drop in US inventories and the continued outage of the North Sea Forties pipeline system.
US crude stocks fell by 6.5 million barrels, more than expected, in the week to Dec. 15, while gasoline stocks rose 1.2 million barrels, less than anticipated, the Energy Information Administration said on Wednesday.
West Texas Intermediate crude futures were up 38 cents at $57.95 a barrel as of 12:47 p.m. EST (1747 GMT), while Brent crude was up 41 cents at $64.22 a barrel.
Crude stocks, excluding the US Strategic Petroleum Reserve, are at 436.5 million barrels, the lowest since October 2015.
"That bodes well to support crude oil prices into 2018 as I expect inventories to continue to decline with robust crude exports being supplied by increases in production," said Andrew Lipow, president of Lipow Oil Associates in Houston.
Inventories have been steadily declining in the United States due to strong export demand and efforts by major oil producers to restrict supply.
OPEC and 10 other producers led by Russia last month extended an agreement to cut oil production by 1.8 million bpd until the end of next year.
The alliance is targeting the elimination of an oil glut to bring inventories in the developed world back to the five-year moving average.
Some producers, including Russia, had raised concerns over whether the deal should continue through the end of 2018. On Wednesday, Saudi Arabian energy minister Khalid al-Falih said it would be premature to discuss changes to OPEC's policy.
He said the drawdown of inventories would likely take through the second half of 2018.
On Wednesday, Kuwait's oil minister Bakhit al-Rashidi said compliance among both OPEC and non-OPEC members currently stands at 122 percent, the highest since the deal was implemented in January.
Traders said rising US crude production, which has soared by 16 percent since mid-2016 to 9.8 million bpd, was capping prices. The all-time US production record of more than 10 million bpd was set in the early 1970s and is based on monthly EIA figures.
Most analysts expect US output to break through 10 million bpd soon, which would be a new record and take it to levels on a par with top exporter Saudi Arabia and close to top producer Russia, which pumps around 11 million bpd.
Goldman Sachs said on Wednesday that it expects global oil inventories will have rebalanced by mid-2018, "leading to a gradual exit from the cuts and increases in OPEC and Russia production through second half 2018".
The bank added that a ramp-up in OPEC production and rising non-OPEC output "will leave risks skewed to lower prices" in the second half of next year.
Prices have been supported by the continuing outage of Britain's Forties pipeline in the North Sea, which delivers crude underpinning Brent futures.
Operator Ineos said repairs were under way on Wednesday after a crack was found that closed the pipeline on Dec. 11. Repairs are expected to take two to four weeks.