Oil hits week highs after steep US inventory drop

Oil prices rose in European trade for the third straight session, hitting week highs as US crude stocks decline according to official EIA data. 

Prices were also boosted by dollar's decline against major rivals, making dollar-denominated commodities cheaper to holders of other currencies. 

Global Prices

US crude rose 1.85% to $81.86 a barrel, the highest since November 23, while Brent added 1.8% to $88.20 a barrel, the highest since November 23. 

US crude rose 2% on Wednesday, while Brent advanced 2.1%, the second session in a row, away from 11-month lows.

US crude rose 2% on Wednesday, while Brent added 2.1% in the last session, away from 11-month lows. 

Oil prices lost 6.5% in November, the fifth monthly loss in six months amid concerns about global demand, especially demand in China. 

US Stocks 

The Energy Information Administration reported a drop of 12.6 million barrels in US crude stocks to 419.1 million barrels last week, while analysts expected a drop of 3.2 million barrels.

Gasoline stocks rose 2.8 million barrels to 213.8 million barrels, as distillate stocks rose 3.5 million barrels to 112.6 million barrels.

The Dollar

The dollar index fell over 0.5% today, plumbing four-month lows at 105.30 against a basket of major rivals. 

Fed Chair Jerome Powell said the pace of rate hikes will be slowed down starting from the December meeting as the bank rebalances its risks.

Following the remarks, markets now put an 80% chance of a 0.5% rate hike by the Fed in December, and a 20% only for a 0.75% rate hike.

OPEC+

OPEC+ countries are expected to convene soon in December, with analysts estimating that weaker demand from China could nudge OPEC+ to cut output once more.

On other news, initial US data on crude inventories will be released today, expected to show a drawdown for the third week in a row, while tomorrow, official data will be released.