NYMEX crude oil rose in Asia on China demand prospects, U.S. supply fall

Investing.com - Crude oil prices edged higher in Asia on Thursday with investors eyeing slightly brighter demand prospects in major importer China.

In China, the May HSBC flash manufacturing PMI rose to 49.1, up slightly from a disappointing one-year low of 48.9 in April. The output index fell to 48.4 in the HSBC May survey, a 13-month-low.

"The Flash China Manufacturing PMI pointed to a further deterioration in operating conditions in April, with production declining for the first time in 2015 so far," said Annabel Fiddes, economist at Markit.

"Moreover, softer client demand, both at home and abroad, along with further job cuts indicate that the sector may find it difficult to expand, at least in the near-term, as companies tempered production plans in line with weaker demand conditions. On a positive note, deflationary pressures remained relatively strong, with both input and output prices continuing to decline, leaving plenty of scope for the authorities to implement further stimulus measures if required."

The People's Bank of China has cut interest rates three times since November last year to keep the economy on track.

On the New York Mercantile Exchange, WTI crude for July delivery rose 0.19% to $59.10 a barrel.

Overnight, crude futures rose sharply on Wednesday, amid dwindling U.S. stockpiles and slowing production which helped ease longstanding concerns of oversupply.

On the Intercontinental Exchange (ICE), Brent crude for July delivery rose 0.97 or 1.52% to 64.99 a barrel on Wednesday.

WTI crude prices neared $59 a barrel in U.S. morning trade before the release of the Energy Information Administration's weekly crude inventory report at 10:30 EST.

U.S. commercial crude stockpiles fell by 2.7 million barrels for the week ending May 15, above estimates of a 2.1 million draw. Crude stockpiles nationwide are now at 482.2 million barrels, according to the EIA -- its highest level at this time of year in at least 80 years.

After steadily increasingly on a weekly basis for the first three and a half months of the year, crude inventories have now declined for a period of three consecutive weeks. A week earlier, crude stockpiles dipped by 2.2 million barrels, amid increased refinery demand as the summer driving season nears. The trend continued last week, as refinery utilization spiked by 1.2%.

At the Cushing Oil Hub in Oklahoma, the nation's largest storage facility of crude, storage capacity remains near 80%, according to Genscape, Inc. A month earlier, the figure hovered around 90%, exacerbating concerns that the U.S. could reach full storage capacity.

Weekly U.S. crude output, meanwhile, declined to 9.262 million barrels per day from 9.374 million bpd, as production in Alaska declined. In recent weeks, the slowdown in production has been concentrated in top shale fields such as the Bakken shale formation in North Dakota and the Permian basin in West Texas.

Elsewhere, United Nations head Ban Ki-Moon scheduled talks on May 28 in Geneva between the Yemeni government, Houthi leaders and other involved parties in the conflict in Yemen, in an effort to end weeks of fighting in the Persian Gulf state.

Yemen has been bombarded by air strikes from Saudi Arabia since early-March. Energy traders are sensitive to any geopolitical unrest involving Saudi Arabia, the world's largest exporter of crude.