Oil prices gain on US stockpiles report

Global oil prices rose further on Thursday as falling US crude stockpiles and production boosted hopes of an easing in the global supply glut, analysts said.

US benchmark West Texas Intermediate (WTI) for delivery in July rose $1.72 to $60.70 a barrel.

Brent North Sea crude for July gained $1.59 to stand at $66.62 a barrel in late afternoon deals in London.

"Prices are continuing their recovery, receiving tailwind from the inventory data published by the US Department of Energy (DoE) yesterday," said Commerzbank analyst Carsten Fritsch.

Crude futures had rallied on Wednesday after the latest official US crude stockpiles report, rebounding from sharp falls a day earlier.

The DoE said supplies of commercial crude, excluding strategic petroleum reserves, fell 2.7 million barrels in the week ending May 15.

That was significantly more than the 1.75 million-barrel decline projected by Bloomberg News.

"Official inventory data continued to offer support for additional (price) moves on the upside as crude oil stockpiles registered their third straight week of declines," said Sucden analyst Kash Kamal.

Daily production meanwhile dropped 112,000 barrels a day to 9.26 million barrels, after a 5,000-barrel increase in the previous week.

Dealers have been hoping that a slowdown in US output could help ease the build-up of global crude reserves, which was a key reason for the collapse in prices of more than 50 percent between June and January.

"Crude oil bounced back a bit after US stockpiles fell more than expected, causing some to think that oversupply may be easing for the moment," said CMC Markets analyst Nicholas Teo.

He added that "with no new leads expected to come from the supply nor demand picture, a further push for crude may come from the volatility of the US dollar".

A strong greenback makes dollar-priced oil more expensive, denting demand.

Analysts said investors are also monitoring UN efforts to relaunch political talks in Yemen as fears grow that civil strife in the country could escalate and draw in oil-producing neighbours Saudi Arabia and Iran, which are backing the warring factions.

"The markets will be monitoring closely for any geopolitical unrest involving the major production region," said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY.