Oil remains bid in Asia on the bullish US inventory report

Oil prices on both sides of the Atlantic remain well bid in Asia after the US EIA reported what was the biggest weekly draw in inventories this year.

At the time of writing, WTI oil traded 16 cents higher around $47.50/barrel. Brent oil was up 14 cents at $50.34/barrel.

Wednesday’s gain in oil benchmarks has been the biggest since December 1. The EIA report showed supplies dropped by 5.2 million barrels for the week ended May 5, which was way higher than the market expectation.

More importantly the gasoline stocks declined 200,000 barrels. However, US crude production edged up by 21,000 barrels to 9.314 million barrels a day, EIA data showed.

Saudi cuts exports to Asia

Prices were also buoyed by murmurs that Saudi Arabia is set to cut exports into Asia next month by 7 million barrels.

Meanwhile, Libya reported yesterday that its output has exceeded 800,000 bpd for the first time since 2014, and could average up to 1.2 million bpd for the rest of this year. However, the markets have turned a blind eye towards bearish news out of Libya.

What to watch out for in the OPEC monthly report?

Prices may rally further if the cartel sees a pick up in the demand in the second half of this year. Moreover, a combination of pickup in demand and an extension of the global output cut deal could tighten the oil markets.