Oil Prices Up But Gains Pared After Seventh Straight Stock Build
NEW YORK, Feb 23 (Reuters) - Oil prices rose on Thursday but gains were pared after U.S. government data showed a seventh straight build in crude stocks, suggesting high inventories could undermine OPEC's move to cut output.
Benchmark Brent crude oil rose 74 cents a barrel to settle at $56.58 after touching a high of $57.26. U.S. light crude traded up 86 cents at $54.45 a barrel after touching $54.94 a barrel.
While prices extended gains by more than 2 percent soon after the inventory data was released, much of those advances dissipated over the next 30 minutes.
Both benchmarks are near the top of relatively narrow $4 ranges that have contained trade so far this year, reflecting a period of low volatility since the Organization of the Petroleum Exporting Countries and other exporters agreed to cut output.
OPEC and producers including Russia aim to cut production by around 1.8 million barrels per day (bpd) to drain an oversupply that has kept prices depressed for more than two years.
But some analysts considered the trading range a growing concern, particularly since high compliance among OPEC members to curb output is having little upside, according to Tariq Zahir, an analyst at Tyche Capital Advisors.
"If someone told me that the OPEC cuts would be well above historic numbers, you would expect prices to be up to $60 or $65 a barrel," he said. "We're at 90 percent (compliance) last month, what if it falls to 80 or 85 percent?"
On Thursday, sources told Reuters that the joint OPEC/non-OPEC technical committee reported an 86 percent compliance on the oil cuts in January. Earlier, sources reported over 90 percent compliance within OPEC.
So far, OPEC appears to be sticking to its deal, but other producers, notably U.S. shale companies, have also increased output, helping swell stocks in the United States, the world's biggest oil consumer.
U.S. crude stocks rose 564,000 barrels last week, the seventh consecutive rise, data from the U.S. Energy Information Administration showed on Thursday, although less than previously expected.
Still, in Cushing, inventories fell by more than 1.5 million barrels, its largest draw since October, which led to a tightening of the front to second month <CLc1-CLc2>, or April/May, WTI spread. Some of those draws were driven by record U.S. crude exports.
Distillate stocks also dropped by the most since October 2014, EIA data added.
(Additional reporting by Christopher Johnson in London and Aaron Sheldrick in Tokyo; Editing by Bernadette Baum and Leslie Adler)
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