Oil Up 3% After US Crude Stocks Drop, Trade Thin
TORONTO, Dec 23 (Reuters) - Oil rose more than 3 percent on Wednesday in thin, pre-holiday trading, buoyed by a surprise drop in U.S. crude inventories, but prices stayed near multi-year lows as global supplies remained abundant and OPEC lowered the demand outlook for its exports.
Ahead of the Christmas holiday on Friday, volume in the front-month U.S. crude contract was around 560,000 lots, compared with more than 1 million a day last week. Volumes were particularly anemic on less widely traded contracts.
West Texas Intermediate futures settled up $1.36 or 3.8 percent at $37.50 a barrel, while Brent crude futures were up $1.25 at $37.36 a barrel.
A day earlier, Brent touched $35.98, its lowest since July 2004.
Baker Hughes reported that U.S. oil drillers cut rigs for a fifth week in the last six, a sign drillers were waiting on higher prices before returning to the well pad. WTI was little changed after the report.
U.S crude inventories fell 5.88 million barrels to 484.78 million last week compared with a forecast rise of 1.4 million, the Energy Information Administration (EIA) said.
"The inventory draw painted a good picture for the bulls because it was larger than a lot of people were expecting," said Oliver Sloup, director of managed futures at iiTrader.com in Chicago. "It's prompting some short covering going into the holiday week and we're seeing some house cleaning by a lot of traders."
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