Oil price rises to $55 a barrel as US uses stocks

Oil increased to $54.95 a barrel in London after a US government report showed US refiners processed a record amount of crude last week.

Refineries in the US used 17.1m barrels a day of crude last week, according to the Energy Information Administration, the most in weekly data going back to 1989.

Refineries operated at the highest utilisation rate since September before they perform planned seasonal maintenance. Oil stockpiles rose 4.1 million barrels.

Meanwhile, Saudi Arabia has cut crude sales to China and southern Asian nations while largely sparing countries including Japan and South Korea, as it curbs supply as part of a deal between Opec and other producers, sources said.

Two south-east Asian refiners received cuts of about 30% from the world’s biggest crude exporter, the sources said, while reductions to a buyer in India were about 20%. Overall term supplies to Asia for next month declined 5% to 10%.

The reductions will primarily be focused on the medium and heavy oil varieties as the producer focuses on sales of lighter grades to stay in the battle for market share against US and African rivals.

Saudi Arabia is trying to implement its portion of promised reductions under a deal between global producers, the success of which will determine if a recovery in benchmark prices is sustainable.

The December 10 agreement between the Organisation of Petroleum Exporting Countries and 11 others including Russia is aimed at ending a glut that has battered crude and the economies of producing nations worldwide.

Kuwait earlier this week said that Opec and its partners will fulfill their pledged cuts.

Bloomberg