Oil prices climb as U.S. crude stocks seen shrinking

By Keith Wallis
SINGAPORE, May 25 (Reuters) - Oil futures rose on Wednesday
after U.S. industry data suggested a larger-than-expected
drawdown in crude inventories last week, although a stronger
U.S. dollar curbed gains.
Oil prices were also supported by an overnight surge in U.S.
equities and strong U.S. home sales that could point to the U.S.
Federal Reserve raising interest rates as early as June.
U.S. crude futures CLc1 had climbed 56 cents to $49.18 a
barrel as of 0042 GMT after ending the previous session up 54
cents.
Brent futures LCOc1 rose 50 cents to $49.11 a barrel,
having closed 26 cents up previously to snap a four-day slide.
U.S. crude stocks dropped by 5.1 million barrels to 536.8
million last week, data from industry group the American
Petroleum Institute showed on Tuesday. That was double
expectations of analysts polled by Reuters. API/S
Gasoline stocks climbed by 3.6 million barrels, while
inventories of distillate fuels, including diesel and heating
oil, fell by 2.9 million barrels, the API data showed.
Investors are awaiting confirmation of the big draw when the
U.S. Energy Information Administration (EIA) issues official
inventory figures on Wednesday.
"U.S. government data are expected to show that oil
inventories have retreated from an eight-decade high, putting
further upward pressure on prices," ANZ said in a note.
That came as some crude producers restarted operations on
Tuesday in Canada's energy heartland, where wildfires have
knocked out up to around 1.5 million barrels per day (bpd) of
shale production.
Almost all of the oil from the tar sands production is
shipped to the United States, said New York-based energy
consultant Poten.
Oil prices were buoyed by a rise in U.S. stocks, with the
Dow Jones industrial average .DJI , the S&P 500 .SPX and the
Nasdaq composite .IXIC all closing up.
Oil prices shrugged off the impact from a strong U.S. dollar
which hovered close to a 10-week high against the euro in Asian
trade on Wednesday, while the dollar index .DXY was also up
against a basket of major currencies.
A strong dollar typically makes greenback-denominated oil
more expensive for holders of other currencies.
Iraq is pumping about 4.5 million bpd now and is aiming to
boost that to 5.5 million to 6 million bpd by 2020, Falah
Alamri, head of Iraq's State Oil Marketing Organisation (SOMO)
said at an Iraq oil conference on Tuesday.