US crude futures hit $55.11 a barrel before easing to around $54.25 a barrel on the first trading day of 2015 in Asia, supported by a larger-than-expected fall in US crude stocks, though China’s lacklustre economic data capped gains.
Oil prices could also have been boosted by a fire at a crude storage and pipeline facility, a key gathering and distribution hub for crude oil produced in North Dakota, the second-largest oil producer in the US.

“It’s quite a volatile market now, so if stockpile are lower, it will give the markets a reason to rally but the bears will also still be defending the market,” said Avtar Sandu, senior manager for commodities at Phillip Futures in Singapore.

US crude inventories fell by 1.8 million barrels in the last week as refineries raised production, compared with analysts’ expectations for an decrease of 67,000 barrels.

Front-month US crude for February delivery gained 84 cents a barrel from Wednesday to $54.11 early on Friday. February Brent crude rose 77 cents a barrel to $58.10. Markets were shut on Thursday for the New Year.

An Enbridge crude storage and pipeline facility just south of Williston, North Dakota, has caught fire, eyewitnesses said.

However, it was not immediately clear if the blaze had been contained, or if the fire was affecting crude storage tanks or other parts of the complex.

The fall in US crude inventory and major oil facility fire follow on the heels of a clarification from the Obama administration on US oil exports, which analysts said could unleash a wave of ultra-light shale oil onto global markets.

Oil prices have fallen by half from last year’s peak to a 5,5-year low, pressured by a global supply glut of crude and exacerbated by the world’s top oil exporter, Saudi Arabia’s refusal to trim supply.

Falling world oil prices will hurt countries across the Middle East unless the oil swing producer acts to reverse the slump, Iran’s deputy foreign minister told Reuters.

The jump in oil prices early Friday, however, was capped by China’s weak factory activity in December, which underlined the challenges facing the country’s manufacturers as they fight rising costs and softening demand in the world’s second-largest economy.

China’s official Purchasing Managers’ Index (PMI) slipped to 50.1 in December from November’s 50.3, its lowest level last year, a government study showed on Thursday.

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