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UPDATE 9-Oil prices jump 4 pct after surprise U.S. crude stocks draw

Published 07/04/2016, 01:28 am
© Reuters.  UPDATE 9-Oil prices jump 4 pct after surprise U.S. crude stocks draw
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* EIA reports 4.9 million barrels draw in U.S. stocks last week

* Analysts in Reuters poll had expected 3.2 mln-barrel build (New throughout, updating market activity and comments after EIA data)

By Barani Krishnan

NEW YORK, April 6 (Reuters) - Oil prices surged by 4 percent or more on Wednesday after the U.S. government reported a surprise draw in domestic crude stockpiles last week, versus market expectations for a new record high.

The U.S. Energy Information Administration (EIA) said crude stocks unexpectedly fell by 4.9 million barrels in the last week as refineries continued to hike output and imports fell. EIA/S

Analysts polled by Reuters had expected inventories to hit record highs for an eight straight week with a build of 3.2 million barrels.

U.S. crude futures CLc1 were up $1.60, or 4.4 percent, at $37.49 a barrel by 11:20 a.m. EDT (1520 GMT).

Brent futures LCOc1 rose by $1.45 to $39.32.

"I think the market is more about the total change in inventories, rather than individual components," said Scott Shelton, energy broker with ICAP (LON:IAP) in Durham, North Carolina. "It's the first week of the second quarter and we have a net draw. That will force the bears to rethink their bearish balances for Q2."

Refinery crude runs USOICR=ECI , which have remained at record seasonal levels for most of this year thanks to unusually strong gasoline margins, rose by 199,000 barrels per day, EIA data showed. Refinery utilization rates USOIRU=ECI rose by 1 percentage point, although usage could ebb with more maintenance expected this month.

"For refiners, they see a market with strong demand for gasoline and decent profit margins. I expect they will begin ramping up in order to capture the sweet spot of high volume and high margins for as long as it lasts," said David Thompson, executive vice-president at energy-specialized commodities broker Powerhouse in Washington.

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