Crude oil futures rallied Wednesday after seeing significant losses yesterday amid reports of shrinking U.S. stockpiles and increased demand from the booming Chinese economy.
Oil futures for delivery in November, which expires today, jumped $1.01, or 1.3 percent, to trade at $80.50 a barrel in electronic trading on the New York Mercantile Exchange. It was trading at $80.47 at 8:56 a.m. London time. December contract, which see greater active trading, upped 91 cents, or 1.1 percent, to trade at $81.07. Brent crude contract for December settlement surged as much as 99 cents, or 1.2 percent, to trade at $81.09 a barrel on the ICE Futures Europe exchange.
Investors regained their trust in oil after seeing a drop of 4.3 percent yesterday, which was the biggest since Feb. 4. Today's surge represents increased confidence of the investors who are also expecting a favorable report from the U.S. Energy Department, due to be released today, which will most likely show a slip of 1.5 million barrels in the stockpile data.
Oil futures yesterday dropped $3.59 to trade at $79.49 in New York but they improved today as China’s central bank raised borrowing costs to 5.56 percent from 5.31 percent, for the first time since 2007.
According to American Petroleum Institute estimates, gasoline inventories dipped 83,000 barrels last week with distillate fuel stockpiles, including heating oil and diesel, dropped 854,000 barrels; U.S. crude inventories, however, increased by 2.3 million barrels in the same period.
Oil also benefited from the slip in the dollar as it shed 0.7 percent to trade at $1.3815 against the euro.
