Oil extends gains, on track for biggest advance this year
US crude and gasoline inventories fell much more steeply than expected this week.
Oil prices edged higher on Friday, reaching fresh two-month highs and on track to post the strongest weekly gains this year as investors digested signs of an easing oversupply picture.
US crude and gasoline inventories fell much more steeply than expected this week and the world's biggest oil exporter Saudi Arabia said it would further reduce oil output in August. Brent crude futures were up 22 cents at $51.71 a barrel at 0931GMT after reaching a fresh two-month high of $51.75 a barrel. The front of the crude oil curve jumped into backwardation, with the month-ahead trading above the subsequent month, showing investors are not expecting recent gains to last.
US West Texas Intermediate (WTI) crude futures were flat at $49.04 a barrel, near a two-month high of $49.24.
"Positive signs came from the draw in gasoline stocks this week, as the US moves into the peak driving season," said Ashley Kelty, oil analyst at Cenkos Securities.
US crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration (EIA).
Brimming US crude supplies have been a challenge to production cuts to prop up prices led by the Organisation of the Petroleum Exporting Countries, meaning weekly US inventory data is closely watched.