Oil rises above $50 a barrel on hopes of Opec curbs, inventory draw-downs

Oil prices, which moved higher on Tuesday lifted by expectations of Opec output curbs, extended gains by around 1 per cent today, after reports of a drop in US crude inventories and declining production in China.

A slightly weaker dollar also boosted oil as it made fuel purchases cheaper for countries using other currencies, potentially spurring demand.

US West Texas Intermediate (WTI) crude oil futures were trading at $50.85 per barrel at 0654 GMT, up 56 cents, or 1.1 per cent, from their the previous settlement.

North Sea Brent crude futures were at $52.23 a barrel, up 55 cents, or 1 per cent.

US crude stockpiles fell 3.8 million barrels in the week to 14 October to 467.1 million barrels, the API reported late on Tuesday, as per the American Petroleum Institute crude inventory numbers.

The US Energy Information Administration (EIA) is due to release official crude and fuel storage data later on Wednesday.

Opec, in its first output cut agreement since 2008, said it plans to reduce production to 32.50 million to 33.0 million barrels per day (bpd), compared with record output of 33.6 million bpd in September.

The group also hopes non-Opec producers, especially Russia, will cooperate in a cut.

Opec secretary-general Mohammed Barkindo said he was confident about the prospects of a planned production cut following an Opec meeting on 30 November.

"I am optimistic we will have a decision," he said.

China, the second-biggest oil consumer processed 43.8 million tonnes (10.7 million bpd) of crude oil in September, up 2.4 per cent from a year ago, government data released today showed.

While economic growth was in line with expectations, at an annual growth rate of 6.7 per cent in the third quarter, its oil figures were supportive of higher oil prices, traders said.

At the same time, China's crude output fell 9.8 per cent to 3.89 million bpd, to near its lowest in six years in the second-biggest year-on-year decline on record.