Oil prices rose on Wednesday supported by the ongoing tension in the Middle East and the American Petroleum Institutes report, which showed oil reserves in the U.S. dropped last week.
On the New York Mercantile Exchange, WTI crude for August delivery traded 0.19% higher on the day at $98.86 a barrel at 6:38 GMT. Light, sweet crude ranged between days high and low at $98.90 and $98.49. WTI marked a 0.7% increase yesterday after APIs report was published.
Brent oil for August delivery also traded higher. The European benchmark stood at $106.11 a barrel at 6:42 GMT, up 0.10% on the day. Brent ranged between days high at $106.21 and low at $105.95 a barrel.
APIs separate oil reserves report, which is based on voluntary information from operators of refineries, bulk terminals and pipelines, showed yesterday that oil inventories shrank by 4.3 million barrels for the week ending June 14, compared to a 1 million decrease forecast. Gasoline stockpiles rose by 918 000 barrels and distillate-fuel reserves fell by 607 000 barrels. Anticipations were for a gain of 1.2 million in gasoline inventories and 300 000 in distillate-fuel reserves.
Oil traders are awaiting the Energy Information Administrations crude oil inventories report, due on Wednesday at 14:30 GMT, referred to as more reliable. According to a Bloomberg survey crude reserves probably fell 500 000 barrels last week amid increased demand during the driving season. Gasoline stockpiles are expected to have increased by 500 000 barrels during the week ending June 14 and distillate-fuel inventories might have jumped by 925 000 barrels. Refineries are expected to have operated at 88% percent capacity, 0.5% higher than the preceding week.
Oil prices also found support by decent U.S. data yesterday. Consumer Price Index for May on annual basis met expectations at 1.4%, compared to 1.1% for the preceding month. On monthly basis, CPI mismatched projections of 0.2% and stood at 0.1%, which however was still well above April’s 0.4% decline. Core Consumer Price Index met estimates on both annual and monthly basis. The Housing Starts indicator was below forecasts of 0.950 million gain, but standing at 0.914 million it outperformed April’s 0.856 million reading. Data showing an increase in consumer prices and overall positive outlook in the housing sector improved sentiment on oil demand, thus driving prices up.
Meanwhile, conflicts in Syria are still having their impact on oil pricing as concern of tension spreading to neighbor oil producing countries still hasnt faded. Marc Ground, an analyst at Standard Bank said for Reuters: “Unless there is a significant increase in the likelihood that other oil-producing countries in the region will be drawn into the conflict, rallies on news-flow surrounding this issue will fade.” A Reuters source at the G8 meeting said that an international peace conference on Syria is unlikely to be held before August due to differences between Russia and the West.
Market players are looking ahead to Ben Bernankes statement on the recovery of the U.S. economy and the future of Feds monetary stimulus, due later today. Analysts are expecting a slow scale back to be announced at this or at some of the next FOMC meetings, which would push dollar-priced commodities down. However, the central bank does not want to surprise markets and is expected to go easy on the tapering. Ken Hasegawa, a commodity sales manager at Newedge Japan said for Reuters: “The Fed does not want the market to be confused or become volatile. The oil market might hold steady, as it is doing now.”
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
