Oil futures rose slightly Wednesday after the government reported a sharp drop in gasoline stockpiles last week, blunting the impact of rising oil inventories.
Light, sweet crude for October delivery traded up 45 cents, or 0.6%, to $89.35 U.S. a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe rose 85 cents, or 0.7%, to $114.87 U.S. a barrel.
U.S. oil inventories rose by 5.3 million barrels last week, the Department of Energy said in its weekly survey. The figure is well above the 200,000-barrel increase forecast by analysts surveyed by Dow Jones Newswires, and came as refineries cut utilization by 1.1 percentage points.
The increase, however, was tempered by a bigger-than-expected draw in gasoline inventories of 2.8 million barrels. The DOE's indirect measure of gasoline demand, meanwhile, rose 2.4% in the week.
The DOE also said stocks of distillates, including heating oil and diesel, rose by 400,000 barrels. Analysts expected distillate stocks to rise by 700,000 barrels. They expected gasoline inventories to fall by one million barrels and refinery use to fall 0.6 percentage points.
Market participants closely follow the DOE's weekly inventory report for cues on oil supply and demand in the world's biggest oil consumer. U.S. demand and the broader health of the economy has taken center stage among oil-market participants in recent months, amid intensifying concerns that the recovery has stalled.
Such concerns have been a key factor behind the pullback in crude prices in recent months, with Nymex crude off a high of nearly $115 U.S. a barrel reached in May. The price of Brent crude, the European benchmark, has also fallen, but the contract remains elevated due to uncertainties about Libyan supply and production problems in the North Sea, where the crude is sourced.
Earlier Wednesday, payroll giant Automatic Data Processing Inc. offered a tepid reading on U.S. hiring this month, saying private-sector jobs in the U.S. rose by 91,000. Economists expected an August gain of 100,000.
Traders will be closely following Friday's nonfarm payrolls report from the U.S. Bureau of Labor Statistics for confirmation of the reading.
Separately, several storms brewing in the Atlantic Ocean have traders concerned about the prospect of supply disruptions. The National Hurricane Center said a tropical depression in the Gulf of Mexico has a 10% chance of becoming a hurricane over the next two days, potentially posing a threat to the key Gulf production area.
Market participants are also closely following Tropical Storm Katia, located further in the Atlantic.
Front-month September reformulated gasoline blendstock, or RBOB, recently traded up 3.46 cents, or 1.2%, to $3.0304 U.S. a gallon. September heating oil traded up 0.72 cents, or 0.2%, to $3.0764 U.S. a gallon. Both contracts are set to expire at the close of trading Wednesday.
