Crude-oil futures edged higher Wednesday after a weekly government report on U.S. oil inventories calmed trader concerns about rising supplies.
Light, sweet crude for July delivery settled 50 cents, or 0.52%, higher at $95.88 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe traded 57 cents higher at $103.53 a barrel.
U.S. oil stockpiles rose by 2.5 million barrels last week, the Energy Information Administration said, pushing total inventories to 393.8 million barrels for the week ended June 7. The increase surprised analysts who had expected a modest decline in stockpiles. But traders reacted positively to EIA's inventory data as it came in sharply lower than industry group American Petroleum Institute's report Tuesday evening that said stockpiles increased 9 million barrels last week.
"It wasn't as bad as last night," said Peter Donovan, a trader at brokerage firm Liquidity Energy in New York. He said the API data raised traders' expectations for a sharp increase in stockpiles in the EIA's report. When the EIA data showed a smaller stockpile build, crude futures were lifted.
The market was also buoyed by the International Energy Agency's Wednesday forecast of tighter global supplies in coming months. The monthly report by the Paris-based energy watchdog said the the amount of oil processed by refineries will rise by 2.2 million barrels a day between the second and third quarters of 2013. Oil supplies could "struggle to keep up with refining demand," the IEA said.
Meanwhile, a weaker U.S. dollar supported crude prices as it fell against a basket of currencies Wednesday. A weak dollar makes oil cheaper for buyers in other currencies, which often leads to gains in dollar-denominated oil futures. The ICE dollar index was recently 0.23% lower compared to Tuesday.
Crude-oil futures have gained 4.5% in June, helped by the steady economic recovery in the U.S. that has some investors expecting higher energy demand. But some analysts and traders are growing concerned about oil's recent gains when compared to the stock market. The Standard & Poor's 500 is down 0.7% this month. Equities have often served as a guide for oil traders on future economic growth.
"It is quite strange," said Kyle Cooper, managing partner at IAF Advisors in Houston. "What is surprising is that [oil is rising] in the light of low equity markets."
Early this week, monthly forecasts from the OPEC and the EIA gave a more pessimistic picture of the oil market. The EIA said Tuesday in its short-term energy outlook it expected the growth of oil demand in China, the world's second-biggest oil consumer, to slow to 4.1% this year, a drop from the 4.4% growth projected last month. OPEC modestly lowered its forecast for global oil-demand growth this year.
Gasoline futures turned lower Wednesday as stockpiles increased. Front-month July reformulated gasoline blendstock, or RBOB, settled 1.30 cents lower at $2.8101 a gallon.
The EIA said gasoline stocks rose by 2.7 million barrels, more than analysts' estimates of an increase of 500,000 barrels. "There is more than adequate supply for the summer-driving season," said Andy Lipow, president of trading advisory Lipow Oil Associates, as inventories were 9.8% higher than year-ago level.
Stocks of distillate, which include heating oil and diesel, fell 1.2 million barrels while analysts expected an increase of 1.3 million barrels.
July ULSD heating oil settled 3.77 cents higher at $2.8952 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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