Oil Prices Advance on Signs of strong US Demand

Oil Prices Advance on Signs of Strong US Demand

Global oil prices rebounded Wednesday from the previous day's multimonth lows as dealers digested signs of strengthening crude demand in the U.S.

LONDON -- Global oil prices rebounded Wednesday from the previous day's multimonth lows as dealers digested signs of strengthening crude demand in the United States, the world's top crude consumer.

Gains were capped, however, by investor caution ahead of the release of minutes from the U.S. Federal Reserve's July monetary policy meeting.

In late afternoon trade, Brent North Sea crude for October delivery advanced 22 cents to $101.78 a barrel, one day after hitting a 14-month low on easing geopolitical tensions.

New York's West Texas Intermediate (WTI) for delivery in September jumped 79 cents to $95.27 per barrel.

The U.S. government's Department of Energy revealed Wednesday that American crude oil stockpiles slumped 4.5 million barrels in the week ending August 15. That was far heavier than expectations for a drop of 900,000 barrels, according to analysts polled by Dow Jones Newswires.

The WTI price had struck a seven-month low Tuesday as speculative traders sold off ahead of the expiry of the September contract later on Wednesday.

The U.S. government's Department of Energy revealed Wednesday that American crude oil stockpiles slumped 4.5 million barrels in the week ending August 15.

That was far heavier than expectations for a drop of 900,000 barrels, according to analysts polled by Dow Jones Newswires.

A drop in U.S. stockpiles tends to push prices higher because it indicates strengthening oil demand in the world's biggest crude-consuming nation.

The Department of Energy added that stocks of distillates, which include heating oil and diesel, dropped one million barrels. Analysts had predicted a 700,000-barrel decline.

Gasoline reserves however climbed by 600,000 barrels, dashing forecasts for a drop of 1.3 million.

Desmond Chua, market analyst at CMC Markets in Singapore, said dealers were also squaring positions before they scrutinize the minutes of a two-day Fed meeting that ended on July 30.

Investors will be looking at whether the minutes "reveal anything insightful pertaining to tightening monetary policy," Chua said.

Bank policymakers have said the Fed will hold its near-zero interest rate policy until the U.S. economy strengthens but may raise rates if the jobs market keeps improving.

Traders are also continuing to track conflicts in crude producers Libya and Iraq, as well as in Ukraine, a key conduit for Russian gas exports to Europe, analysts said.

Copyright Agence France-Presse, 2014

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