Crude oil rallies to 14-month high ahead of U.S. supply data

Investing.com - Crude oil futures extended strong gains from the previous session to hit the highest level since May 2012 on Wednesday, as investors looked ahead to closely-watched weekly supply data on stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD104.68 a barrel during European morning trade, up 1.1% on the day.

New York-traded oil prices rose by as much as 1.3% earlier in the day to hit a session high of USD104.87.

Oil traders were awaiting data from the U.S. government on oil and fuel supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.

The report was expected to show that U.S. crude oil stockpiles declined by 3.3 million barrels last week, while gasoline inventories were forecast to rise by 1.2 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 9 million barrels last week, blowing past expectations for a decline of 3.8 million barrels.

Market players also looked ahead to the release of the minutes of the Federal Reserve’s June policy meeting later in the trading day, while a speech by Fed Chairman Ben Bernanke was also in focus.

Oil traders shrugged off disappointing trade data out of China earlier in the day.

Official trade data showed that Chinese exports fell 3.1% from a year earlier in June, confounding expectations for a 4.0% increase.

The report also showed that imports declined 0.7%, bringing the country’s trade surplus to USD27.1 billion for the month, broadly in line with expectations for a surplus of USD27 billion.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.45% to trade at USD108.28 a barrel, with the spread between the Brent and crude contracts standing at USD3.60 a barrel.

The London-traded Brent contract rose to a session high of USD108.47 a barrel earlier in the day, the strongest level since April 3.

The gap between the contracts narrowed to the smallest level since December 2010 last week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.