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Oil dips in wake of rise in U.S. inventories

by December 29, 2016 General

By Catherine Ngai | NEW YORK

NEW YORK Oil prices dipped on Thursday after a surprise increase in U.S. inventories reversed an advance in prices that had pushed global crude benchmarks to their highest levels since July last year.

U.S. light, sweet crude was down 37 cents at $53.69 by 12:02 p.m. ET (1702 GMT) while North Sea Brent crude was down 17 cents at $56.05 a barrel.

Traded volumes were thin with many investors away for year-end holidays, although the expiry of the front-month February ICE Brent contract on Thursday could generate some activity. U.S. distillate and gasoline futures expire on Friday, which could add to price swings, analysts noted.

“The petroleum markets are mixed in light-volume trade amid a general wait for fresh fundamental news that might push prices out of their established ranges,” Tim Evans, an energy futures specialist at Citi Futures, said in a note.

Both crude oil benchmarks have made big gains this month, touching year-to-date highs after OPEC and other producers agreed to curb production in an attempt to balance an over-supplied fuel market.

“The market is in good shape although it might fail to make significant advances this year,” said analyst Tamas Varga at London brokerage PVM Oil Associates. “If that is the case, the uptrend should continue in early January.”

“Either way, the odds are still on higher numbers.”

U.S. crude oil stocks unexpectedly rose last week, data from the U.S. Energy Information Administration showed on Thursday, adding 614,000 barrels in the week to Dec 23. Analysts polled by Reuters before the report had forecast on average that inventories would decline by 2.1 million barrels.

In Cushing, Oklahoma, inventories rose by 172,000 barrels, the EIA said.

But the overall trend appeared to be upwards with oil producers committed to output cuts.

A committee of the Organization of the Petroleum Exporting Countries and non-OPEC producers will meet in Vienna on Jan. 21-22 to discuss compliance with the production agreement, Kuwaiti oil minister Essam Al-Marzouq told state news agency KUNA.

(Additional reporting by Christopher Johnson in London and Mark Tay in Singapore; Editing by Bernadette Baum)

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