Forexpros – Crude oil futures were higher during European morning hours on Wednesday, recouping a portion of the previous session’s sharp losses as traders looked forward 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.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD84.86 a barrel during European morning trade, jumping 1.15%.
It earlier rose by as much as 1.3% to trade at a session high of USD85.00 a barrel. Prices fell to USD83.64 a barrel on Tuesday, the lowest since July 3.
Oil prices tumbled nearly 2% 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.
But prices regained strength Wednesday as oil traders turned 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.
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.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Markets remained jittery after the German Constitutional Court delayed on Tuesday its decision on whether the euro zone’s bailout fund, the European Stability Mechanism, is compatible with German law.
The court said a decision could take months rather than weeks due to the complexity of the ruling. Without German backing, the ESM, which was originally meant to start on July 1, then delayed to July 9, cannot come into effect.
Meanwhile, the latest meeting of euro zone finance ministers also continued to weigh on investor confidence.
While the ministers agreed to grant Spain an extra year through 2014 to reach its deficit reduction targets, they did not come up with a final figure for aid for the country’s ailing banks but said some EUR30 billion would be available by the end of this month.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.95% to trade at 98.91 a barrel, with the spread between the Brent and crude contracts standing at USD14.05.
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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