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UPDATE 5-Oil rises towards $46 on U.S. inventory drop, economy hopes

Wed, 2nd Sep 2020 04:50

* API reports larger than expected drop in U.S. crude stocks

* OPEC August oil output rises for 2nd month - survey

* Factories worldwide shake off COVID-19 gloom but outlook
shaky

* Coming up: EIA report, 1430 GMT
(Updates prices)

By Alex Lawler

LONDON, Sept 2 (Reuters) - Oil rose towards $46 a barrel on
Wednesday, gaining for a third day, supported by a report that
U.S. crude inventories fell and as surveys showing stronger
manufacturing raised hopes of an economic recovery from the
coronavirus pandemic.

U.S. crude stocks fell by 6.4 million barrels, the American
Petroleum Institute (API) said, more than forecast.
Manufacturing surveys around the world showed expanding activity
in August, although the outlook remains shaky.

Brent crude, the global benchmark, was up 31 cents,
or 0.7%, at $45.89 a barrel as of 1220 GMT, climbing for a third
day. U.S. West Texas Intermediate rose 28 cents, or 0.7%,
to $43.04.

"Market players are currently riding a wave of optimism,
though it could come crashing down at any moment," said Stephen
Brennock of oil broker PVM.

U.S. crude inventories were forecast to fall by 1.9 million
barrels.

The U.S. government's Energy Information Administration
issues its official figures at 1430 GMT, which will be
scrutinised to see if they confirm the API's numbers.

The EIA figures "may provide some short-term volatility but
are unlikely to provide enough impetus to break oil out of its
recent trading ranges," said Jeffrey Halley, analyst at broker
OANDA.

Oil has recovered from historic lows hit in April, when
Brent slumped to a 21-year low below $16 and U.S. crude went
negative.

A record supply cut by the Organization of the Petroleum
Exporting Countries and allies, a grouping known as OPEC+, has
helped support prices.

The producers have begun to return some crude to the market
as demand partially recovers and OPEC in August raised output by
about 1 million barrels per day (bpd), a Reuters survey found on
Tuesday.
(Additional reporting by Yuka Obayashi; editing by Louise
Heavens and David Evans)

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