Oil up on lower stockpiles

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The oil price jumped more than 2 percent on Wednesday after figures out of America today showed a surprise drop in crude stockpiles for a 3rd straight week.

At 4.57(GMT) Brent crude oil was trading at $46.75 a barrel up from $45.88 in yesterday’s trading.

The U.S. Energy Information Administration (EIA) said that oil inventories dropped by 6.2 million barrels last week which was well below the expectations of most analysts who predicted a figure of 3.4 million barrels.

The news may back up a report by S&P today which noted that although there may be a bit of a glut in the oil market at the moment, a numbers of factors would come into play and bring it under control. The ratings agency has revised their oil price for the rest of 2016 from $40 to $42 a barrel.

"The current oversupply of oil appears unlikely to persist into the medium or longer term as natural field depletion and a lower number of new field developments have a greater bearing on supply," S&P said in a report on Wednesday.

The oil price is expected to come under volatility later in the trading session as the US Federal Reserve announces their latest interest rate decision with further gains predicted if as expected the Fed keeps rates on hold.


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