Oil Futures Settle Notably Higher After Inventory Data

WASHINGTON (dpa-AFX) - Oil prices climbed higher on Wednesday after data showed a much larger than expected drop in U.S. crude inventories in the week ended June 28th.

Oil prices were also supported by a weak dollar. The greenback shed ground today amid bets the Federal Reserve will likely cut interest rate in September.

West Texas Intermediate Crude oil futures for August ended up by $1.07 at $83.88 a barrel.

Brent crude futures climbed to $87.34 a barrel, gaining $1.10 or about 1.3%.

Data from the Energy Information Administration (EIA) showed crude oil inventories in the U.S. plunged by 12.2 million barrels last week, after climbing by 3.6 million barrels a week earlier. Economists had expected crude oil inventories to edge down by 0.2 million barrels.

At 448.5 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year, the EIA said.

The EIA data also said gasoline inventories decreased by 2.2 million barrels last week and are 1% below the five-year average for this time of year.

Distillate fuel inventories, which include heating oil and diesel, also fell by 1.5 million barrels last week and are about 10% below the five-year average for this time of year.

According to the report released by the American Petroleum Institute on Tuesday, crude oil inventories in the U.S. declined by 9.16 million barrels for the week ending June 28 against market expectations of 0.15 million barrels dip.

Gasoline stocks rose by 2.47 million barrels during the week, while distillate stocks (including diesel and heating oil) decreased by about 740,000 barrels.

Meanwhile, fears about Hurricane Beryl faded after the U.S. National Hurricane Center said the storm was expected to weaken by the time it entered the Gulf of Mexico this week.

However, there are concerns the hurricane's rain and wind impacts could still disrupt Mexico's offshore oil production, and also hurt infrastructure and tighten supply.

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