Oil prices were steady in early trade on Thursday after a large U.S. stock draw tightened the market, while traders kept a close eye on whether the Federal Reserve would later in the day raise interest rates for the first time in almost a decade.
Higher U.S. interest rates would likely attract cash from money traders, lifting the dollar. That could be bearish for dollar-denominated oil as it would make fuel more expensive for importers who hold other currencies.
Crude prices jumped as much as 6 percent on Wednesday, when data from the U.S. Energy Information Administration showed the largest crude drawdown in seven months at the key delivery point in Cushing, Oklahoma.
U.S. West Texas Intermediate (WTI) crude futures were trading at $47.15 per barrel at 0207 GMT, virtually unchanged from their previous close. Brent prices were also flat, at $49.77 per barrel.
“WTI prices gained the most this month after the EIA reported stockpiles slipped 2.1 million barrels last week as refineries increased operating rates for the first time since July. U.S. refiners typically slow output during September to perform maintenance,” ANZ Bank said on Thursday.
Some analysts said this week that oil markets may have bottomed out following over a year of tumbling prices as producers start cutting back output.
“Non-OPEC, non-U.S. oil supply has peaked and is starting to decline as double-digit capex cuts start to impact production,” Bernstein Research said on Thursday.
It added that Yemen, Mexico, Malaysia and China were the leading countries curbing production, estimating a combined cut of 400 million barrels per day.
U.S. crude prices have seen bigger price rises in recent weeks than globally traded Brent futures, owing largely to Asia’s weakening economies as well as rising output from West Africa as well as the North Sea. This has narrowed the WTI discount on Brent by almost 70 percent since mid-August to around $2.20 per barrel.
“Brent appears to be suffering from higher Atlantic Basin supplies (West Africa and North Sea) as well as the wider macro picture, with concern over China and consequent trouble in emerging markets, while European growth remains anaemic,” said JBC Energy.