WTI oil futures trade above $61 ahead of U.S. weekly supply report

Investing.com - West Texas Intermediate oil futures rose to the highest level of the year on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories rose at a slower pace than expected last week.

On the New York Mercantile Exchange, crude oil for June delivery hit an intraday peak of $61.67 a barrel, the most since December 11, before trading at $61.39 during European morning hours, up 98 cents, or 1.63%. A day earlier, Nymex oil prices jumped $1.47, or 2.49%, to end at $60.40.

Wednesday's government report was expected to show that U.S. crude oil stockpiles rose by 1.5 million barrels last week, while gasoline stockpiles were forecast to increase by 0.9 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 1.5 million barrels in the week ended May 1. The report also showed that supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, declined by 336,000 barrels.

U.S. oil futures are up nearly 30% since hitting a five-year low of $43.57 on January 29 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 80 cents, or 1.18%, to trade at $68.32 a barrel after touching a daily high of $68.65, a level not seen since December 8. On Tuesday, London-traded Brent futures rose $1.07, or 1.61%, to close at $67.52.

The spread between the Brent and the WTI crude contracts stood at $6.93 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, was down 0.45% to trade at 94.84 early Wednesday.

The drop in the dollar came after the Commerce Department said Tuesday the trade deficit widened by 43.1% to $51.4 billion in March, the largest since October 2008, due to a jump in imports.

The trade gap was far larger than assumed in the government’s initial estimate of first quarter growth last week, fuelling fears that the U.S. economy may have contracted in the first three months of the year.

Investors were looking ahead to the ADP report on private sector jobs growth for April later in the day, as well as a speech by Federal Reserve Chair Janet Yellen, which would be closely watched for any indications on the timing of the first hike in interest rates.

Traders were are also waiting for Friday's U.S. nonfarm payrolls report for further clues on when the Fed may raise interest rates.

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