By Keith Wallis
SINGAPORE, July 30 (Reuters) - Oil prices extended gains in
Asian trade on Thursday, after a larger than expected draw in
U.S. crude and gasoline stocks strengthened the outlook for oil
demand.
But gains were capped by a stronger dollar and despite the
drop in oil stocks some commentators warn of a global supply
glut, with OPEC members producing 3 million barrels per day more
than demand in the second quarter. ID:nL5N1083OI
U.S. crude stockpiles fell by 4.2 million barrels in the
week to July 24, more than twenty times analysts' expectations
of a decrease of 184,000 barrels, Energy Information
Administration (EIA) data showed. ID:nL1N1091JP
Gasoline stocks dropped by 363,000 barrels against analysts'
forecasts of a 512,000-barrel gain with U.S. gasoline demand up
6.2 percent from a year ago.
The large draw down in stocks could be short-lived, said
Tony Nunan, oil risk manager at Tokyo's Mitsubishi Corporation.
"The EIA data shows demand is being stimulated by lower oil
prices. It could be a flash in the pan. We have passed peak
summer demand. It could be temporary," he said.
The drawdown is "providing temporary support that should
wane - a last hurrah for summer," Nunan added.
Brent crude for September delivery LCOc1 rose 36 cents to
$53.74 a barrel as of 0240 GMT, after settling 8 cents higher in
the previous session.
U.S. crude for September delivery CLc1 climbed 17 cents to
$48.96 a barrel, after ending the previous session up 81 cents,
or 1.7 percent.
Nunan estimated global oversupply at between 1.5-3 million
barrels a day.
"Prices this year and next are going to be weak. It could go
to $40 a barrel which has been a major support line because if
it goes below that a lot of upstream developments will be
underwater and below long-term breakeven prices," Nunan said.
"Long-term $60-70 a barrel is a more sustainable price," he
added.
"The outlook still remains cautious for crude oil prices,
especially Brent oil. Prices may not get any relief in the short
term as players are expected to continue the fight for market
share at the expense of price," ANZ said in a note on Thursday.
A stronger dollar, buoyed by the outcome of a two day U.S.
Federal Reserve meeting that saw the economy and jobs continuing
to strengthen, was also weighing on prices.
The dollar index .DXY rose 0.26 percent to 97.233 against
a basket of currencies. ID:nL1N1092AW
A strong U.S. currency makes dollar denominated commodities
more expensive for holders of other currencies.
Investors are eyeing the release of key European and U.S.
consumer confidence, GDP and jobs data later on Thursday.
(Editing by Ed Davies)