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December 30, 2019 10:00 AM, EST

Oil Extends Gain Near Three-Month High as US Stockpiles Shrink

FuelAn oil refinery stands in West Texas. (Eddie Seal/Bloomberg News)

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Oil rose for a fifth session, the longest run of gains since July, as a bigger-than-forecast decline in U.S. crude stockpiles eased oversupply concerns.

Futures climbed 0.6% in New York after closing at the highest level in three months Dec. 27. American crude supplies fell by 5.47 million barrels in the week ended Dec. 20, more than three times the median estimate in a Bloomberg survey. Elsewhere, Iraq resumed output at an oil field a day after protesters forced a halt in operations.

Oil is poised for the biggest yearly gain since 2016, after being boosted recently by a breakthrough in U.S.-China trade talks and a commitment by the Organization of Petroleum Exporting Countries and its allies to deepen output cuts. Hedge funds remain upbeat on prices, increasing bullish wagers on Brent oil to a seven-month high, despite comments from Russia that OPEC+ would discuss ending supply curbs next year.

“Crude draws and positive market sentiment have been price-supportive in recent weeks,” said UBS Group AG analyst Giovanni Staunovo. “On the one hand, market participants are looking at rising tensions in Iraq and Libya, but on the other hand production has not been hit by those tensions.”

West Texas Intermediate for February delivery rose 36 cents to $62.08 a barrel on the New York Mercantile Exchange as of 8:34 a.m. local time Dec. 30. Prices are also set for the biggest monthly gain since January.

Brent crude for February settlement added 66 cents, or 1%, to $68.82 a barrel on London’s ICE Futures Europe exchange. The global benchmark crude traded at a $6.51 premium to WTI.

While concern lingers over rising production from non-OPEC nations including the U.S. and Brazil, some of those worries were countered by a drop in American crude inventories to the lowest level in two months. The decline came despite the first dip in exports since late November, according to Energy Information Administration data Dec. 27. Gasoline stockpiles, however, rose for a seventh week to the highest since mid-March.

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