Oil futures held onto positive territory Wednesday after a government report showed oil inventories last week fell as refiners ramped up operations, but fuel stockpiles rose.
Light, sweet crude for October delivery recently traded up 36 cents, or 0.4%, at $85.80 U.S. a barrel on the New York Mercantile Exchange, nearly unchanged from levels earlier in the trading day. Brent crude on ICE Futures Europe traded up 74 cents, or 0.7%, to $110.05 U.S. a barrel.
The U.S. Department of Energy posted a surprise 2.2-million-barrel decline in commercial oil inventories last week in its 10:30 a.m. EDT report. The decline came on the back of higher demand from refiners, who ramped up operations by 1.2 percentage points to 90.3% of capacity.
Still, crude's rally was tempered by a build in fuel stockpiles, which suggests demand among end-users in the U.S., the world's biggest crude consumer, still appears weak. Gasoline stockpiles last week rose 1.4 million barrels, while stocks of distillates, including heating oil and diesel, rose 1.7 million barrels.
Analysts surveyed by Dow Jones Newswires had expected oil inventories to rise 1.3 million barrels. Gasoline inventories were seen falling 900,000 barrels, while distillate stocks were expected to rise 700,000 barrels. Refinery runs were expected to fall 0.1 percentage point.
Crude futures had started the day slightly higher after equities markets in the U.S. rallied. Many traders have come to see stocks as barometers of broader economic sentiment in the U.S., which has been dogged by signs of a stalling economic recovery.
Oil futures rose to their highest level in nearly a week on Tuesday, on the back of a broad equity-market rally.
Still, oil prices could quickly come under selling pressure at the first sign of a resumption of oil exports from Libya. Rebel forces made strides toward securing Tripoli on Tuesday, capturing the compound of Col. Moammar Gadhafi. However, the Libyan strongman was nowhere to be found and AFP reported fresh firefights near Gadhafi's compound early Wednesday.
With Libya now in rebel hands, many investment banks have already cut their forecasts for crude-oil prices for 2012. The country exported 1.3 million barrels of oil a day prior to the outbreak of conflict in February, and the supply disruption has kept oil prices -- especially those of Brent crude, the European benchmark -- elevated.
Front-month September reformulated gasoline blendstock, or RBOB, recently traded up 0.02 cents to $2.8768 U.S. a gallon. September heating oil traded up 1.75 cents, or 0.6%, to $2.9600 U.S. a gallon.
