Oil prices edge modestly higher

US benchmark West Texas Intermediate for September delivery edged 2 cents higher on Wednesday to $US106.85 a barrel.

Oil prices have risen modestly on a generally bullish US oil inventory report and improving economic data in Europe.

European benchmark Brent oil added 38 cents at $US109.82.

The gains came after the weekly US oil inventory report showed a decline of 2.8 million barrels, more than the drop of 1.5 million barrels expected by Dow Jones Newswires.

US petrol stocks fell 1.2 million barrels compared with a forecasted decline of 0.6 million, while supplies of distillate fuel rose 2.0 million barrels compared with the expected jump of 0.8 million.

"The gasoline supply could get tight," said Andy Lipow, a Houston consultant, citing the upcoming European refining maintenance season as a challenge.

Kyle Cooper, managing partner at IAF Advisors in Houston, said the oil inventory report helped offset the drag from US equity markets, which were lower all day.

"The draw was helpful in an otherwise weaker market," Cooper said.

The bigger jump in Brent oil prices came after eurozone economic data showed a 0.3 per cent rise in eurozone growth in the most recent quarter, snapping an 18-month recession. The report also showed gains of 0.7 per cent in Germany and 0.5 per cent in France.

The European oil market is also more closely tied to international supply disruptions, such as those befalling Iraq and Libya of late.

"Overall the oil market continues to be supported by the loss of supply," Lipow said.

Market watchers are also concerned about a possible spread of the Egypt violence to larger Middle Eastern petroleum producers.


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Source: AAP


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