NEW YORK, May 24 (Reuters) - Oil prices rose on Tuesday as investors anticipated a weekly drawdown in U.S. crude inventories that they hoped would boost prices closer to $50 a barrel, while a rally on Wall Street also lent support.
"We're gearing up on expectations that the wildfires in Canada may finally be showing up in U.S. crude inventory numbers," said Phil Flynn, analyst at the Price Futures Group in Chicago. "If they show up decisively, it may be what the market needs to test $50."
Commercial crude stocks in the United States likely fell by around 2.5 million barrels to 538.8 million in the week ended May 20, a Reuters poll showed.
Investors were waiting for data from the American Petroleum Institute (API), a trade group, at 4:30 p.m. EDT (2030 GMT), to see if those expectations are correct. Official inventory numbers are due on Wednesday from the U.S. government.
U.S. crude's West Texas Intermediate (WTI) futures settled up 54 cents, or 1.1 percent, at $48.62 a barrel. Brent crude futures finished up 26 cents, or 0.5 percent, at $48.61, ending a four-day slide.
Both have traded in a $5 range below $50 over the past month, with Brent settling down four straight days prior to Tuesday.
U.S. equities surged, giving oil a further lift, as investors grew more comfortable with the possibility that the U.S. Federal Reserve might soon raise interest rates. Crude buyers also seemed unfazed by a stronger dollar, which typically makes greenback-denominated oil costlier in other currencies.
Earlier in the session, oil was supported by the drop in Iraqi oil output to 4.5 million barrels per day from January's record high of 4.78 million bpd.
Consultant IHS said just 2.8 billion barrels of oil were discovered outside North America in 2015 following a sharp fall in exploration and appraisal drilling. It was the lowest total since 1952. Morgan Stanley said in a separate report the figure would be 12.1 billion barrels if it included the United States.
"As spare capacity dwindles, the threat of a price spike increases," said Matt Smith, who tracks crude cargoes for New York-based Clipperdata.
Offsetting some positive sentiment in oil, a strike in France dented European crude demand as picketers disrupted refinery operations. Police used water cannon and tear gas to break up a strike that blocked access to a large oil refinery in the southern port area of Marseille.
(Additional reporting by Simon Falush in LONDON; Editing by David Evans and David Gregorio)
Copyright 2016 Thomson Reuters. Click for Restrictions.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you