Forexpros – Crude oil futures moved sharply higher during U.S. afternoon trade Wednesday, after a U.S. government report showed oil supplies fell less-than-expected last week.
Oil also climbed on the possibility the Federal Reserve will consider more action to stimulate growth in the world’s largest economy.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD85.33 a barrel during U.S. afternoon trade, jumping 1.25%.
It earlier rose by as much as 2.25% to trade at USD86.27 a barrel, the highest since June 1. Prices touched USD81.21 on June 4, the lowest since October 6, 2011.
Crude prices traded at USD86.00 prior to the release of the Energy Information Administration data.
The U.S. EIA reported in its weekly report that U.S. crude oil inventories fell by a modest 0.1 million barrels in the week ended June 1, below expectations for a 0.5 million barrel decline. U.S. crude supplies rose by 2.2 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 384.6 million barrels as of last week, just below the highest level since 1990.
Total motor gasoline inventories increased by 3.3 million barrels, above expectations for a gain of 0.7 million barrels, after falling by 0.8 million barrels in the preceding week.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil prices were sharply higher before the supply data as investors hung on to hopes for action by global central banks and other authorities to stimulate growth and boost the world economy.
Speaking at the European Central Bank’s post policy meeting press conference, Mario Draghi said that there were downside risks to the European economy, stemming from the debt crisis in the region and its growing potential to spill over to the wider economy.
Draghi said the ECB would extend its policy of lending to banks until mid-January 2013 but didn’t announce any new three-year lending operations, disappointing expectations for fresh easing measures to stabilize markets.
Earlier Wednesday, the ECB left euro zone interest rates unchanged at 1%, in a widely expected decision.
Oil traders were now shifting their attention to a Congressional testimony by Federal Reserve Chairman Ben Bernanke on Thursday about the state of the U.S. economy.
The Wall Street Journal, citing interviews and Fed speeches, reported late Tuesday that the U.S. central bank is mulling new measures to stimulate growth in the world’s largest economy.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery was up 2.1% to trade at 100.91 a barrel, with the spread between the Brent and crude contracts standing at USD15.08.
On Monday, prices fell to USD95.65 a barrel, the lowest since January 26, 2011.
London-traded Brent is down nearly 21% since hitting an intraday high of USD128.38 on March 1.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
However, revived talks between Iran and major powers over Tehran’s nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.
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