Oil prices dipped Friday in Asia after an unexpected decline in U.S. crude oil inventories pushed crude futures back above US$83 a barrel.
Prices were also supported overnight by an International Energy Agency report concluding oil inventories held by the world's largest industrialized countries have fallen below a five-year average, and by concerns that clashes between Turkish forces and Kurdish rebels could affect Iraqi oil supplies.
Light, sweet crude for November delivery fell 4 cents to US$83.04 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
The contract jumped US$1.78 to settle at US$83.08 a barrel Thursday in New York.
The weekly inventory report from the U.S. Energy Department's Energy Information Administration said crude supplies fell 1.7 million barrels in the week ended Oct. 5. Analysts surveyed by Dow Jones Newswires on average had expected oil inventories to rise 1 million barrels.
While the report also said refinery activity and supplies of gasoline rose unexpectedly last week, traders focused on the oil inventory number, analysts said.
Inventories of gasoline rose 1.7 million barrels last week, countering analyst expectations that they would fall 300,000 barrels. Distillate inventories, which include heating oil and diesel fuel, fell 600,000 barrels, in line with expectations.
Despite the increases, supplies of gasoline and heating oil remain low despite last week's increase, analysts said.
Demand for gasoline rose last week by about 80,000 barrels, the EIA said, a sign that warm weather may be extending the U.S. driving season. And low heating oil inventories may be a concern despite forecasts for a warmer-than-normal U.S. winter.
Some analysts also saw the EIA report as validation of the earlier International Energy Agency report, which concluded that crude inventories held by the 30 nations of the Organization for Economic Cooperation and Development fell by 21 million barrels in August to 2.66 billion barrels, 70.4 million barrels lower than last year.
The IEA left its estimate of world oil demand growth for this year and next unchanged at 1.5 percent and 2.4 percent respectively.
November Brent crude fell 8 cents to US$80.07 a barrel on the ICE futures exchange in London.
Heating oil futures fell 0.08 cent to US$2.2465 a gallon (3.8 liters) and gasoline prices fell 0.36 cent to US$2.0630 a gallon. Natural gas futures dropped 0.6 cent to US$6.870 per 1,000 cubic feet.
The EIA said refinery activity rose by 0.3 percentage point to 87.8 percent of capacity last week. Analysts expected a 0.1 percentage point decline.
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