Crude Oil Ends Higher After Supply Data

(RTTNews) - U.S. crude oil rebounded from an 8-month low to end sharply higher Wednesday, after a weekly official oil report from the U.S. Energy Information Administration showed crude oil stockpiles in the U.S. to have dropped much more than expected last week.

Earlier today, a report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have dropped 4.5 million barrels in the week ended August 15, while analysts anticipated a decline of 1.2 million barrels. The EIA report showed U.S. crude oil inventories at 362.50 million barrels, end last week.

Gasoline stocks increased by 0.6 million barrels last week, with analysts anticipating a drop of 1.6 million barrels. Inventories of distillate, including heating fuel, dropped 0.96 million barrels, while analysts expected a decline of 0.70 million barrels.

A report from the American Petroleum Institute late Tuesday showed U.S. crude oil stockpiles to have declined by a less than expected 1.4 million barrels in the week ended August 15.

Meanwhile, the minutes of the meeting held July 29-30 showed the Federal Open Market Committee voted 9-1 to maintain its current policy of very gradually withdrawing stimulus from the U.S. economy. Fed forecasts show most officials expect to start raising rates next year, but some members are now making the case for a "relatively prompt" rate hike.

The Federal Reserve debated when to hike interest rates amid signs the labor market has moved closer to normal, the minutes of the Fed's July policy meeting showed.

The situation in Ukraine and the Middle East also continue to be in focus, with reports of some clashes in parts of eastern Ukraine. In Iraq, fighting is on at Mosul Dam, a day after Iraqi and Kurdish forces were reported to have recaptured it from the Islamic militants.

Meanwhile, Islamic militants have reportedly released a video showing the execution of American journalist James Foley, retaliating against U.S. airstrikes in Iraq.

Light Sweet Crude Oil futures for September delivery surged $1.59 or 1.7 percent to close at $96.07 a barrel on the New York Mercantile Exchange Wednesday. September contracts expire today at settlement.

Crude prices for September delivery scaled a high of $97.05 a barrel intraday and a low of $94.61.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, gained $0.59 or 0.6 percent to close at $93.45 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for October delivery scaled a high of $93.58 a barrel intraday and a low of $92.73.

On Tuesday, crude oil futures plunged 2.0 percent on demand growth concerns with easing tensions in Ukraine, Iraq and Libya. Recent reports about a likely fall in global demand for oil with easing geopolitical concerns over the situation in Ukraine dragged down oil prices.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.07 on Wednesday, up from its previous close of 81.87 late Tuesday in North American trade. The dollar scaled a high of 82.12 intraday and a low of 81.87.

The euro ended lower against the dollar at $1.3293 on Wednesday, as compared to its previous close of $1.3321 late Tuesday in North American trade. The euro scaled a high of $1.3324 intraday and a low of $1.3276.

In economic news, Bank of England policymakers were split on rate decision this month, for the first time in more than three years as two members said the current economic situation warrant an immediate rate hike from a historic-low. At the August Monetary Policy Committee meeting, two members sought a quarter-point hike in rate to 0.75 percent, while the other seven members voted to keep the rate unchanged at 0.50 percent.

Members were unanimous on holding the rate at 0.50 percent, prevalent since July 2011. The the nine-member board also unanimously voted to leave the asset purchase program unchanged at GBP 375 billion.

Meanwhile, U.K. factory orders grew more than expected in August and manufacturers forecast robust growth in output over the next three months, survey data from the Confederation of British Industry showed Wednesday. About 29 percent of firms reported total order books were above normal and 18 percent said they were below normal, giving a balance of +11 percent. The score increased from +2 in July and above expectations of 4 percent.

Elsewhere, eurozone construction output declined for the second straight month in June, data from Eurostat showed Wednesday. Construction output fell 0.7 percent in June from a month ago. But the rate of decline eased from the 1.4 percent fall registered in May.