On Thursday, oil prices stabilized, holding on to the majority of their recent gains after another drop in U.S. crude inventories signaled a firming market, and as a tropical storm heads towards oil producing facilities in the Gulf of Mexico.
Benchmark Brent crude LCOc1 dropped 5 cents a barrel at $52.52 by 0925 GMT. U.S. light, sweet crude CLc1 declined 10 cents at $48.31 a barrel.
Both contracts increased more than 1 percent on Wednesday, maintained by potential output disruptions from the Gulf of Mexico storm Tropical Depression Harvey.
“For the next few days, the U.S. market is going to be focused on Texas as Tropical Depression Harvey is expected to strengthen into a Category I hurricane by Friday,” stated Sukrit Vijayakar, director of energy consultancy Trifecta.
“Operators in the area are already closing down platforms and evacuating workers as a precaution,” he continued.
Harvey strengthened into a tropical storm late on Wednesday night with winds of roughly 40 miles per hour (65 km per hour) and was located about 440 miles (705 km) southeast of Port Mansfield, Texas, the U.S. National Hurricane Center reported.
Aside from the weather, traders said falls in U.S. commercial crude storage levels were a indication of a slowly tightening market, although another increase in output held the market back.
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U.S. crude oil production reached 9.53 million barrels per day (bpd) last week, its highest in over 2 years and advanced over 13 percent from their most recent low in mid-2016.
U.S. crude stocks dropped last week and gasoline stocks fell as well, the Energy Information Administration reported on Wednesday.
Crude inventories declined by 3.3 million barrels in the week ending Aug. 18 to 463.17 million barrels, decreased 13.5 percent from record levels last March.