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WTI oil futures soar above $62 after bullish U.S. supply data

Published 05/06/2015, 10:36 AM
Updated 05/06/2015, 10:36 AM
© Reuters.  WTI oil futures extend gains after bullish U.S. supply data

© Reuters. WTI oil futures extend gains after bullish U.S. supply data

Investing.com - West Texas Intermediate oil futures rose to the highest levels of the session on Wednesday, after data showed that oil supplies in the U.S. fell for the first time in four months last week.

On the New York Mercantile Exchange, crude oil for June delivery hit an intraday peak of $62.56 a barrel, the most since December 10, before trading at $62.33 during U.S. morning hours, up $1.93, or 3.2%. Prices were at around $62.03 prior to the release of the inventory data.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 3.9 million barrels in the week ended May 1, confounding expectations for an increase of 1.5 million barrels.

The report also showed that supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, declined by 12,000 barrels last week, the second straight weekly drop.

Total U.S. crude oil inventories stood at 487.0 million barrels as of last week.

U.S. oil futures are up nearly 40% since hitting a recent low on March 18 amid mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months amid an ongoing collapse in rigs drilling for oil.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 24 last week to 679, the 21st straight week of declines and the lowest level since September 2010.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery rallied $1.78, or 2.64%, to trade at $69.31 a barrel after touching a daily high of $69.60, a level not seen since December 5.

Brent prices were supported by concerns over a disruption to supplies from Libya and after Saudi Arabia raised crude prices to buyers in Asia.

The spread between the Brent and the WTI crude contracts stood at $6.98 a barrel, compared to $7.12 by close of trade on Tuesday.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.35% to trade at 93.99, the lowest level since February 19.

The drop in the dollar came after data showing that U.S. non-farm private employment rose less than expected in April fuelled concerns over the strength of the U.S. labor market.

Payroll processing firm ADP said non-farm private employment rose by 169,000 last month, below expectations for an increase of 200,000. The economy created 175,000 jobs in March, whose figure was downwardly revised from a previously reported increase of 189,000.

A separate report showed that U.S. non-farm business sector labor productivity decreased by 1.9% in the first three months of the year, worse than expectations for a decline of 1.8%. The preceding quarter’s figure was revised to a drop of 2.1% from a previously reported fall of 2.2%.

The report also said unit labor costs increased by 5.0% in the first quarter, above forecasts for a gain of 4.3% and following rise of 4.2% in the fourth quarter.

A recent run of disappointing U.S. economic data dampened optimism over the recovery, fuelling speculation the Federal Reserve could delay hiking interest rates until late 2015, instead of tightening midyear.

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