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Oil prices recover on big US crude stock drawdown, pipeline shutdown supports

Oil costs rose on Wednesday as industry data showed a larger-than-expected drawdown in U.S. unpolished stockpiles, while expectations for an extended shutdown of a major North Sea rough pipeline also continued to bolster markets.

Brent crude was up 64 cents, or 1 percent, at $63.98 a barrel by 0413 GMT. It had set up home down $1.35, or 2.1 percent, on Tuesday on a wave of profit-taking after press release of a key North Sea pipeline shutdown helped send the global benchmark unaffected by $65 for the first time since mid-2015.

U.S. West Texas Transitional crude was up 42 cents, or 0.7 percent,at $57.56 a barrel, would rathe settled the previous session down 85 cents.

Britain’s biggest conveyor from its North Sea oil and gas fields is likely to be shut for several weeks for patches, its operator said on Tuesday.

The pipeline, which carries about 450,000 barrels per day (bpd) of Forties undeveloped, was shut after cracks were found. It has particular significance to international markets because Forties is the largest out of the five crude oil streams that underpin the timed Brent benchmark.

A number of producers, including BP and Royal Dutch Prang pay out, said they had closed down oil fields in response.

“Four weeks is much bigger than most projections,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Inquire into and Consulting in Tokyo. “The pipeline incident came just when the bazaars are tightening on coordinated production cuts.”

After settlement on Tuesday, earnestness group the American Petroleum Institute said crude stocks in the Coordinated States fell by 7.4 million barrels last week.

That is little short of twice the decline of analysts’ expectations for a drop of 3.8 million barrels.

Gasoline size ups rose by 2.3 million barrels, compared with analysts’ demands in a Reuters poll for a 2.5 million-barrel gain. Distillate fuels stockpiles, which file diesel and heating oil, rose by 1.5 million barrels, compared with expectations for a 902,000-barrel advance, the API data showed.

The U.S. government’s Energy Information Administration releases its weekly oil publish on Wednesday.

Selling had gained pace on Tuesday after the U.S. Energy Advice Administration said in its monthly short-term energy outlook that U.S. coarse oil output will rise by 780,000 barrels per day (bpd) to a record-high of 10.02 million bpd in 2018.

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