Oil prices rallied to end modestly higher as weaknesses in the dollar and lower stockpiles buoyed the commodity off its six year lows touched during the previous session on China’s devaluation of the Yuan.
Light sweet crude for September delivery gained 22 cents or 0.5% to settle at $43.30 a barrel on the New York Mercantile Exchange after fluctuating between losses and gains for most of the session.
Bret futures, the global benchmark, climbed 48 cents or 1% to end at $49.66 a barrel on the London Based ICE Futures Exchange.
“The market needed a big drawdown to reverse the current trends and didn’t get it,” Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, told Reuters.
According to a report by the government backed Energy Information Administration, crude stockpiles fell by 1.7 million barrels last week; slightly below the 1.8 million barrel draw consensus estimate of analysts polled by Reuters.
Crude levels however remained at their highest levels at this time of the year for more than 80 years.
According to the report, gasoline inventories also declined by a beiger then expected 1.3 million barrels 600,000 draw consensus estimate of analysts polled by the Walk Street Journal.
The rally was however caped by expectations by7 most traders that the stockpiles would grow again economic sanctions against Iran were lifted.
“Even with stronger demand, the global oil market, which has been plagued by a supply glut, is unlikely to balance until the fourth quarter of 2016,” Vikas Dwivedi, analyst at Macquarie, told Market Watch.
”We believe it will be difficult for Brent and WTI crude prices to sustain any significant, fundamentally driven rallies for the balance of this year and potentially through the first half of next year.”
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