Investing.com -- Crude oil prices rose to their highest in over three weeks Thursday, building on sharp gains caused by a surprise draw in U.S. stockpiles that triggered some frantic short-covering.
By 11 AM ET (1500 GMT) U.S. crude futures were at $56.11 a barrel, just off an intra-day high of $56.40 and up nearly 5% from the start of the week. The international benchmark Brent was up 0.3% at $61.38 a barrel.
Prices got a lift from the U.S. manufacturing purchasing managers index from IHS Markit which showed activity holding up better than expected in October. That distinguished it yet again from much weaker numbers out of Japan and the euro zone earlier in the day that had triggered some short-lived weakness. The PMI rose to 51.5 from 51.1, defying expectations of a drop to post its highest reading since May.
"Yesterday’s U.S. oil inventory data gave strength to the changing oil market narrative as both crude (-1.7 m bl), gasoline (-3.1 m bl) and middle distillate (-2.7 m bl) stocks declined by a total of 7.5 million barrels last week," SEB's chief commodity strategist Bjarne Schieldrop wrote in a research note. "U.S. inventories of crude, gasoline and middle distillates in total is now at the lowest level this time of year since 2015."
While that's still higher than 2014, it's 33 million barrels below the average of the last four years.
Gasoline Futures were up 0.4% at $1.6658 a gallon by 11 AM, while natural gas futures were flat at $2.28 per 10,000 MMBtu.
Schieldrop argued that U.S. supply growth is set to slow sharply next year, allowing the OPEC+ group of producers the luxury of not having to agree additional big cuts to their own output.
Patterson-UTI Energy (NASDAQ:PTEN), one of the U.S.'s biggest rig companies, said Thursday it expected rig hires to bottom out by the end of the year, but admitted that it had had to cut prices dramatically this year to keep the decline from being worse, and said it lost money during the third quarter even so.
OPEC and other exporters led by Russia are due to review their output deal in December, and Russian officials have been instrumental in talking down the need for further cuts, pointing to the problems of U.S. shale producers.
Elsewhere Thursday, Igor Sechin the chief executive of Rosneft, tried to breathe life into the notion that geopolitical risk premiums should be higher, calling into question the reliability of Saudi Arabia as a supplier after September's attacks on its oil facilities.
"Recent events have shown that we can list as so-called fragile suppliers not only the traditional five countries - Iran, Venezuela, Libya, Iraq, Nigeria - but also Saudi Arabia," Sechin was quoted as saying.