Crude oil futures extended the previous session’s rally to trade at a five-week high on Wednesday, amid speculation weekly data due later in the day will show the first drop in U.S. oil supplies since September.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD97.46 a barrel during European morning trade, up 1.45%.
New York-traded oil futures rallied to a session high of USD97.52 a barrel earlier, the strongest level since October 30.
The January contract settled up 2.37% on Tuesday to end at USD96.04 a barrel.
Oil futures were likely to find support at USD93.67 a barrel, the low from December 3 and resistance at USD97.81 a barrel, the high from October 30.
Market players looked ahead to data from the U.S. government on oil and fuel supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 12.4 million barrels in the week ended November 29, compared to expectations for a decline of 1.25 million barrel. Gasoline stockpiles decreased 120,000 barrels.
Wednesday’s government report was expected to show that crude oil stockpiles fell by 500,000 barrels last week, while gasoline inventories were forecast to increase by 1.5 million barrels.
Traders have been concerned over rising U.S. inventories and increased production levels in recent weeks.
U.S. crude oil inventories totaled 391.4 million barrels as of last week, the most since June, while domestic output hit 8.02 million barrels a day, the highest level in almost 25 years.
U.S. oil prices received a further boost from prospects for an easing of a supply bottleneck to refiners in Texas from the U.S. storage hub of Cushing, Oklahoma.
TransCanada''s Keystone Gulf Coast Pipeline will start carrying oil from Cushing to Port Arthur, Texas, on January 3, according to reports.
Investors also looked ahead to key U.S. economic data later in the day to gauge the strength of the economy and the need for stimulus.
Later in the day, the U.S. was to release the ADP report on private sector job creation, as well as data on new home sales and the trade balance. In addition, the Institute of Supply Management was to release its services PMI.
The U.S. is also set to release data on third quarter gross domestic product on Thursday, while November’s highly-anticipated nonfarm payrolls report is scheduled for Friday.
The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labor and housing markets.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Market players are also looking ahead to a meeting of the Organization of the Petroleum Exporting Countries in Vienna later this week. OPEC is forecast to keep its supply target unchanged at 30 million a day on December 4.
Saudi Arabian Oil Minister Ali al-Naimi said Tuesday that the global oil market is “in equilibrium”. The country produces nearly a third of the oil from the cartel’s 12 members.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for January delivery dipped 0.1% to trade at USD112.52 a barrel, while the spread between the Brent and U.S. crude contracts narrowed to USD15.06 a barrel.
London-traded Brent futures rose to USD113.02 a barrel earlier in the session, the highest since September 12.
Brent prices remained supported amid ongoing concerns over a disruption to supplies from Libya. The OPEC member is the holder of Africa’s biggest oil reserves.
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