Oil price surges after lower than expected US inventory rise

NEW YORK: Oil prices rallied and U.S. crude jumped nearly 6 percent to a 2015 peak on Wednesday after government data showed crude oil inventories in the United States rose less than expected last week.

Though hitting a record level for a 14th consecutive week, U.S. crude inventories rose only 1.3 million barrels to 483.69 million, the smallest build since the week ending Jan. 2, the Energy Information Administration said on Wednesday.

That build was below expectations for a 4.1 million barrel rise in a Reuters survey of analysts.

U.S. May crude rose $3.10 to settle at $56.39 a barrel, highest of the year. The $56.69 session peak was the highest front-month crude price since Dec. 24.

The Brent and U.S. futures spread narrowed to $3.34 before closing at $3.93. It was more than $13 in early March.

Expiring front-month May Brent rose $1.89 to settle at $60.32. Brent hit its 2015 peak at $63 in February.

The more heavily traded June Brent rallied $3.51 to settle at $63.32 and pushed its premium to May Brent to $3.37 intraday.

Both Brent and U.S. crude pushed above their 100-day moving averages on Tuesday.

"The smallish crude oil build and the drop in gasoline inventories pushed prices up and also attracted some technical buying," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

A bigger-than-expected 2.1 million barrel drop in gasoline stocks in EIA data lifted U.S. RBOB 10 cents to $1.9360 a gallon, highest settlement since early March.

Wednesday's EIA report followed its Monday report forecasting U.S. shale production in May would post its first monthly decline in four years and North Dakota's Tuesday report showing its production fell in February from January.

Iran said on Wednesday it would only accept a deal over its nuclear program if sanctions are simultaneously lifted. Uncertainty about a deal is supportive to oil prices.

Oil traders are monitoring OPEC talks with other producers.

Russia has been holding "unprecedentedly active" consultations with the OPEC and Latin American countries, a senior Russian official said Wednesday, though a Gulf OPEC delegate said the comment "does not mean a joint cut in production."

The global oil market may take longer to tighten than expected due to a surge in OPEC output and a potential rise in Iranian exports, the International Energy Agency said in a report on Wednesday.- Reuters