Investing.com - Crude oil held gains in Asia on Wednesday after U.S. industry stock data showed a sharp drop at the end of last week.
On the New York Mercantile Exchange, WTI crude for June delivery gained 1.36% to $49.28 a barrel. Brent crude gained 1.19% to $49.19 a barrel.
The American Petroleum Institute said that crude oil stock dropped 5.137 million barrels last week, compared to a decline of 3.3 million barrels seen, as refineries typically ramp up gasoline production as the summer driving season approaches next week in the U.S. with the Memorial Day weekend. Distillates stocks declined 2.922 million barrels, while gasoline stock rose 3.606 million barrels. Traders will now look to crude and refined products stock data from the U.S. Department of Energy due later Wednesday.
Overnight, crude prices rose considerably on Tuesday remaining near 6-month highs, as Iraq's OPEC governor expressed concerns regarding the nation's slowing output, helping ease supply levels from near-record highs.
A string of production slowdowns in Canada, Nigeria and Libya in recent weeks has provided upside pressure for crude, pushing U.S. crude futures near $50 a barrel, a level it last reached in mid-October. On the Intercontinental Exchange (ICE), Brent crude for July delivery wavered between $47.80 and $49.09 a barrel, before closing at $48.62, up 0.27 or 0.56% on the day.
The price of WTI crude rose above Brent just before the close of trading, marking the first time in months that the front month contract for U.S. crude traded at a premium over brent. At the end of Tuesday's session, WTI traded at a premium of 0.03 over brent, considerably above the spread a day earlier when it closed at a discount of 0.23 against its international counterpart.
In London, Iraq OPEC governor Falah Alamri indicated that production nationwide is hovering around 4.5 million barrels per day, amid slowing output due primarily to poor weather, maintenance issues and numerous power outages. In addition, Alamri said Iraqi production has been dented by a halt in production among several oil fields in the northern Kirkuk region, responsible for pumping 170,000 bpd. In January, Iraq production soared to a record-high of 4.7 million bpd, nearly 3.9 million bpd of which was exported by the Persian Gulf oil power. Despite the recent slowdown, Alamri said more growth is expected in the near future.
Separately, Iraq minister of industry and minerals Mohammed al Daraji said at the same conference that it needs the price of oil to increase to around $65 a barrel in order to plug the requisite budgetary gaps.
Last week, Iraq received a $5.4 billion loan from the International Monetary Fund, conditioned on the premise that the Iraqi government works on paring a $20.5 billion budget. Iraq, the second-largest producer in OPEC, has long-range forecasts of ramping up production to 6 million bpd by 2020.