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US oil prices rise after plunge in distillate supplies

The price of US crude oil rebounded after US distillate supplies fell sharply last week as severe winter weather gripped large parts of the nation.

NEW YORK: The price of US crude oil rebounded after US distillate supplies fell sharply last week as severe winter weather gripped large parts of the nation.

The main US futures contract, West Texas Intermediate (WTI) for delivery in March, clawed back from losses to finish at US$97.32 a barrel, a gain of 59 cents from Wednesday.

The European benchmark, Brent North Sea crude for March, shed 69 cents to settle at US$107.58 a barrel.

Both the WTI and Brent crude oil contracts earlier in the day were trading in negative territory amid profit taking after a two-day rally, said Forex.com analyst Fawad Razaqzada.

But the Department of Energy's (DoE) weekly report on US oil inventories, delayed a day by the US holiday Monday, sparked WTI buyers' appetites.

"This distillate draw in the inventory report was very supportive to the market," said John Kilduff of Again Capital.

Supplies of distillate fuel, which include heating oil and diesel, fell by 3.2 million barrels in the week ended January 17, according to the report.

The plunge surprised analysts, who on average forecast a decline of 800,000 barrels.

The sharp drop came as heating fuel demand rose in the face of severe winter cold, Kilduff said.

Kilduff said a drop in refinery activity, with refineries running at 86.5 per cent capacity down from 90.0 per cent, also played a part.

US crude-oil supplies rose for the first time in eight weeks, the DoE reported, but the increase of one million barrels was in line with expectations.

Downbeat Chinese data had weighed on the oil markets earlier, particularly on Brent.

Chinese manufacturing contracted for the first time in six months in January, a survey showed Thursday, raising concerns about 2014 growth prospects for the world's second-largest economy.

"Brent pulled back... as weak PMI data from China, falling for the first time in six months to 49.6, caused demand concerns," said analyst Lucy Sidebotham at Inenco.

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