Oil gains ground on US inventory drawdown, dollar's decline

Oil futures rose in American trader as the dollar index fell off November 13 highs, after earlier US data showed another inventory drawdown last week. 

As of 07:31 GMT, US crude futures due in January rose 0.29% to $51.80 a barrel, while Brent February futures rose 0.78% to $60.67 a barrel, as the dollar index shed 0.32% to 97.08 off four-week highs. 

US Inflation Data 

Earlier US data showed consumer prices were unchanged in November as expected, down from October's 0.3% increase. 

Core prices excluding food and energy, rose 0.2% as expected, and also the same as October. 

US Inventory Drawdown 

The Energy Information Administration reported a deficit of 1.2 million barrels in US crude stocks in the week ending December 7, compared to a 7.3 million drop in the previous reading, while analysts expected a 3M decline, with total stocks now down to 442 million barrels, while still 7% above five-year averages. 

Gasoline stocks rose 2.1 million barrels, marking them 3% above averages, while distillate stocks fell 1.5 million barrels, making them 8% below averages. 

Otherwise, OPEC cut forecasts for demand on its oil at its monthly report by 100 thousand bpd to 31.44 million bpd for next year, as competitors pump larger amounts while economic growth slows down. 

On a similar note, Saudi Arabia said it plans to cut output to 10.2 million bpd in January, a 900 thousand bpd cut from November, while Russia plans a cut between 50 and 60 thousand bpd next month. 

OPEC announced an agreement to cut total output by 1.2 million bpd in coordination with allies such as Russia, with the cuts to start in January and with Iran, Libya, and Venezuela, gaining exceptions from the required cuts.

Russia's current output stands at about 11.37 million bpd, while recent reports indicate that Saudi Arabia's production increased by 0.5 million bpd last month to up to 11.3 million bpd, as US output steadied at record highs at 11.7 million bpd.

Libyan production is expected to tumble by 315 thousand bpd due to the cut-off in supplies from the Sharara oil field after armed militias took over it, with another 73 thousand bpd down from another field.