Forexpros – Crude oil futures held on to sharp gains during U.S. morning hours on Wednesday, as traders looked ahead to a supply report from the U.S. later in the day to gauge the strength of oil demand in the world’s largest oil consumer.
Oil traders also eyed the release of the minutes of the Federal Reserve’s most recent policy meeting later Wednesday, which could show whether the central bank is leaning toward more stimulus to boost growth.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD85.35 a barrel during U.S. morning trade, rallying 1.7%.
It earlier rose by as much as 1.8% to trade at a session high of USD85.45 a barrel. Prices fell to USD83.64 a barrel on Tuesday, the lowest since July 3.
Oil traders shifted their attention to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products later in the day.
The report was expected to show that U.S. crude oil stockpiles fell by 1.1 million barrels last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 0.69 million barrels last week, compared to expectations for a decline of 1.2 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Market players also awaited the release of the minutes from the Fed’s mid-June policy meeting, for hints of whether the central bank will engineer another round of asset purchases, or quantitative easing.
A fresh round of monetary easing could potentially hurt the dollar and support oil prices.
Meanwhile, investors shrugged off fears over faltering global growth and its implications on oil demand prospects.
OPEC left its forecast for 2012 growth in world oil demand unchanged at 0.9 million barrels a day, but revised down its 2013 outlook to 0.8 million barrels a day, citing a continuing global economic slowdown.
Oil prices tumbled on Tuesday as fears over the global economic outlook intensified after official data showed that Chinese exports and imports in June slowed from the previous month, as weakening global demand weighed.
Prices came under further pressure after a complete shutdown of Norway’s oil industry was averted, easing concerns over a disruption to supplies from the world’s eighth largest oil producer.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 1.15% to trade at 99.11 a barrel, with the spread between the Brent and crude contracts standing at USD13.76.
London-traded Brent prices rallied to a three-week high of USD102.33 a barrel on July 5.
Brent prices have been well-supported in recent sessions following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
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