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Crude gains on bullish U.S. inventory report

Published 05/21/2014, 01:43 PM
Updated 05/21/2014, 01:45 PM
Upbeat U.S. stockpile numbers give oil prices a boost
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Investing.com - Crude futures rose on Wednesday after data revealed a larger-than-expected weekly draw in U.S. inventories.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in July traded at $104.03 a barrel during U.S. trading, up 1.66%. New York-traded oil futures hit a session low of $102.58 a barrel and a high of $104.27 a barrel.

The July contract settled up 0.22% at $102.33 a barrel on Tuesday.

Nymex oil futures were likely to find support at $100.82 a barrel, Thursday's low, and resistance at $104.99 a barrel, the high from April 16.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 7.2 million barrels in the week ending May 16, far surpassing expectations for a build of 750,000 barrels.

Total U.S. crude oil inventories stood at 391.3 million barrels as of last week.

The report also showed that total motor gasoline inventories increased by 1.0 million barrels, compared to forecasts for a gain of 0.1 million barrels, while distillate stockpiles rose by 3.4 million barrels, compared to expectations for a drop of 0.4 million barrels.

Meanwhile, market players looked ahead to the release of the minutes from the Federal Reserve's latest monetary policy meeting later in the day for insight on the central bank's view of the economy, with hopes language will point to a more robust economy, one that will demand more fuel and energy going forward.

Ongoing tensions between Russia and Ukraine remained in focus, amid concerns over a disruption to supplies from the region.

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Ukraine will hold presidential elections on Sunday, and concerns persist that Russia will meddle in the voting and escalate the crisis. U.S. and European officials have already warned that Russia would face additional sanctions if Moscow disrupts the upcoming elections, including sanctions targeting the Russian economy.

Russia produced 10.4 million barrels of oil per day in 2012 and exported 7.4 million, making it the world’s second largest oil exporter after Saudi Arabia.

Meanwhile, renewed concerns over Libya's oil output further supported prices, following some of the worst violence the country has seen since the 2011 war against Muammar Qaddafi.

Libya, an OPEC member, is home to Africa’s largest oil reserves, but production there has faltered in the three years following the topple of former leader Qaddafi due to political instability and attacks on oil assets.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for July delivery were up 0.75% and trading at US$110.52 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$6.49 a barrel.

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