Oil Climbs After Biggest U.S. Crude Stockpile Drop in Four Weeks

(Bloomberg) -- Oil climbed to a two-week high after a U.S. government report showed the biggest decline in crude inventories since late July.

Futures in New York advanced 3.1 percent on Wednesday. Crude stockpiles fell 5.84 million barrels last week, the Energy Information Administration reported, above the 5.17 million-barrel decrease the American Petroleum Institute was said to report Tuesday. Crude imports slid by the most in six weeks after two weeks of increases. A weaker dollar also helped support the price of oil.

“The swing in imports is what is driving both last week’s build and this week’s draw,” said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets. “Demand, globally, is holding up.”

Oil Climbs After Biggest U.S. Crude Stockpile Drop in Four Weeks

Crude has edged higher for five straight sessions in New York, yet still holds below the key $70-a-barrel level reached late last month. A trade war between the U.S. and China threatens demand, while U.S.-imposed sanctions on Iran could further tighten supply levels.

“Sentiment had been pretty bearish over the last month with concerns over what the impact of tariffs would be on demand,” said Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston. “So, it was somewhat of a relief that you saw inventories decline this week.”

West Texas Intermediate crude for October delivery added $2.02 to settle at $67.86 a barrel on the New York Mercantile Exchange. Total volume traded was about 26 percent below the 100-day average.

Brent for October settlement climbed $2.15 to end the session at $74.78 a barrel on the London-based ICE Futures Europe exchange, the highest level in three weeks. The global benchmark crude traded at a $6.92 premium to WTI.

The Bloomberg Dollar Spot Index fell for a fifth day, bolstering the appeal of commodities traded in the U.S. currency, such as oil.

The EIA data also showed gasoline and distillate stockpiles increased, while supplies at the Cushing, Oklahoma, storage hub rose for a second straight week.

Other oil-market news:

  • Gasoline futures rose for a third day, up 2.5 percent to settle at $2.0680 a gallon, the highest level in two weeks.
  • Saudi Arabian Oil Co. is focusing on buying a strategic stake in chemical giant Saudi Basic Industries Corp., putting work on its potential initial public offering on hold, according to people familiar with the matter.
  • A U.S. sale of crude stockpiles from the Strategic Petroleum Reserve shows that other producers can’t raise output enough and will only push prices higher, Iranian oil official Hossein Kazempour Ardebili said in an interview.
  • U.S. central bankers are ready to raise interest rates again so long as the economy stays on track, according to a record of the Federal Reserve’s most recent policy meeting.

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