U.S. oil rallies above $100 as traders cheer stockpile drop
U.S. crude oil prices rose by more than $1 a barrel on Wednesday after a government report showed an unexpected sharp drop in inventories in the United States.
Brent crude rose gradually over the session, taking support the strength in U.S. oil prices, as well as tensions in Libya where rebels continue to delay the government's plan for more oil exports.
The U.S. Energy Information Administration said U.S. crude inventories fell by 1.8 million barrels nationally last week as imports fell, including a 1.4 million barrel drop at Cushing, Oklahoma, delivery point of the U.S. futures contract. The EIA numbers largely confirmed Tuesday's industry report from the American Petroleum Institute.
U.S. crude rose by $1.27 to settle at $100.77 a barrel, on course for its biggest one-day gain since early April.Brent crude for June delivery tracked West Texas Intermediate higher, rising more than $1 above $108 a barrel, off an earlier high of $107.60, pressured after Russia called for separatists in the east of Ukraine to postpone an independence referendum.
The international contract was pressured after Russian President Vladimir Putin called for separatists in the east of Ukraine to postpone an independence referendum this weekend, in a possible sign of moves to ease the crisis.
While gas and oil supplies have not been significantly disrupted by the Ukraine situation, traders and analysts say the risk remains that the United States and European Union could target the Russian energy industry with sanctions, or Moscow could choose to restrict exports.
Libyan rebels occupying oil ports in the east of the country said they would not deal with new Prime Minister Ahmed Maiteeq, despite an agreement last month to reopen four ports. Protests at Libya's major oilfields and ports have decimated its oil production to just over 250,000 barrels per day from around 1.4 million bpd in mid-2013 and slowed exports to a trickle.
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